Correlation Between NovaGold Resources and MAG Silver
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and MAG Silver at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NovaGold Resources and MAG Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and MAG Silver Corp, you can compare the effects of market volatilities on NovaGold Resources and MAG Silver and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NovaGold Resources with a short position of MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and MAG Silver.
Diversification Opportunities for NovaGold Resources and MAG Silver
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NovaGold and MAG is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and MAG Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG Silver Corp and NovaGold Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NovaGold Resources are associated (or correlated) with MAG Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG Silver Corp has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and MAG Silver go up and down completely randomly.
Pair Corralation between NovaGold Resources and MAG Silver
Assuming the 90 days horizon NovaGold Resources is expected to under-perform the MAG Silver. In addition to that, NovaGold Resources is 1.24 times more volatile than MAG Silver Corp. It trades about -0.01 of its total potential returns per unit of risk. MAG Silver Corp is currently generating about 0.04 per unit of volatility. If you would invest 1,650 in MAG Silver Corp on September 1, 2024 and sell it today you would earn a total of 530.00 from holding MAG Silver Corp or generate 32.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. MAG Silver Corp
Performance |
| Timeline |
| NovaGold Resources |
| MAG Silver Corp |
NovaGold Resources and MAG Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and MAG Silver
The main advantage of trading using opposite NovaGold Resources and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, MAG Silver can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MAG Silver will offset losses from the drop in MAG Silver's long position.| NovaGold Resources vs. Centerra Gold | NovaGold Resources vs. Alamos Gold | NovaGold Resources vs. MAG Silver Corp | NovaGold Resources vs. Seabridge Gold |
| MAG Silver vs. Pan American Silver | MAG Silver vs. Endeavour Silver Corp | MAG Silver vs. SSR Mining | MAG Silver vs. Osisko Gold Ro |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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