Correlation Between NovaGold Resources and Royal Gold
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Royal 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 Royal 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 Royal Gold, you can compare the effects of market volatilities on NovaGold Resources and Royal 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 Royal Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Royal Gold.
Diversification Opportunities for NovaGold Resources and Royal Gold
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NovaGold and Royal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Royal Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Gold 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 Royal Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Gold has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Royal Gold go up and down completely randomly.
Pair Corralation between NovaGold Resources and Royal Gold
Allowing for the 90-day total investment horizon NovaGold Resources is expected to under-perform the Royal Gold. In addition to that, NovaGold Resources is 2.05 times more volatile than Royal Gold. It trades about -0.08 of its total potential returns per unit of risk. Royal Gold is currently generating about 0.31 per unit of volatility. If you would invest 13,141 in Royal Gold on November 1, 2024 and sell it today you would earn a total of 992.50 from holding Royal Gold or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. Royal Gold
Performance |
| Timeline |
| NovaGold Resources |
| Royal Gold |
NovaGold Resources and Royal Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Royal Gold
The main advantage of trading using opposite NovaGold Resources and Royal Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Royal 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 Royal Gold will offset losses from the drop in Royal Gold's long position.| NovaGold Resources vs. Seabridge Gold | NovaGold Resources vs. Eldorado Gold Corp | NovaGold Resources vs. New Gold | NovaGold Resources vs. IAMGold |
| Royal Gold vs. Wheaton Precious Metals | Royal Gold vs. Agnico Eagle Mines | Royal Gold vs. Sandstorm Gold Ltd | Royal Gold 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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