Correlation Between NovaGold Resources and Plato Gold
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Plato Gold 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 Plato Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Plato Gold Corp, you can compare the effects of market volatilities on NovaGold Resources and Plato Gold 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 Plato Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Plato Gold.
Diversification Opportunities for NovaGold Resources and Plato Gold
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NovaGold and Plato is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Plato Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plato Gold 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 Plato Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plato Gold Corp has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Plato Gold go up and down completely randomly.
Pair Corralation between NovaGold Resources and Plato Gold
Assuming the 90 days horizon NovaGold Resources is expected to generate 0.27 times more return on investment than Plato Gold. However, NovaGold Resources is 3.64 times less risky than Plato Gold. It trades about -0.03 of its potential returns per unit of risk. Plato Gold Corp is currently generating about -0.03 per unit of risk. If you would invest 559.00 in NovaGold Resources on August 28, 2024 and sell it today you would lose (56.00) from holding NovaGold Resources or give up 10.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. Plato Gold Corp
Performance |
| Timeline |
| NovaGold Resources |
| Plato Gold Corp |
NovaGold Resources and Plato Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Plato Gold
The main advantage of trading using opposite NovaGold Resources and Plato Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Plato Gold 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 Plato Gold will offset losses from the drop in Plato Gold's long position.The idea behind NovaGold Resources and Plato Gold Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Plato Gold vs. Q Gold Resources | Plato Gold vs. MAS Gold Corp | Plato Gold vs. ExGen Resources | Plato Gold vs. Carlin Gold |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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