Correlation Between NovaGold Resources and Minco Capital
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Minco Capital 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 Minco Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Minco Capital Corp, you can compare the effects of market volatilities on NovaGold Resources and Minco Capital 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 Minco Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Minco Capital.
Diversification Opportunities for NovaGold Resources and Minco Capital
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NovaGold and Minco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Minco Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minco Capital 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 Minco Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minco Capital Corp has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Minco Capital go up and down completely randomly.
Pair Corralation between NovaGold Resources and Minco Capital
Assuming the 90 days horizon NovaGold Resources is expected to generate 0.51 times more return on investment than Minco Capital. However, NovaGold Resources is 1.97 times less risky than Minco Capital. It trades about 0.05 of its potential returns per unit of risk. Minco Capital Corp is currently generating about 0.02 per unit of risk. If you would invest 434.00 in NovaGold Resources on September 3, 2024 and sell it today you would earn a total of 81.00 from holding NovaGold Resources or generate 18.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
NovaGold Resources vs. Minco Capital Corp
Performance |
| Timeline |
| NovaGold Resources |
| Minco Capital Corp |
NovaGold Resources and Minco Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Minco Capital
The main advantage of trading using opposite NovaGold Resources and Minco Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Minco Capital 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 Minco Capital will offset losses from the drop in Minco Capital's long position.| NovaGold Resources vs. Algoma Steel Group | NovaGold Resources vs. Champion Iron | NovaGold Resources vs. International Zeolite Corp | NovaGold Resources vs. European Residential Real |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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