Correlation Between New Gold and Northern Dynasty
Can any of the company-specific risk be diversified away by investing in both New Gold and Northern Dynasty 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 New Gold and Northern Dynasty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Gold and Northern Dynasty Minerals, you can compare the effects of market volatilities on New Gold and Northern Dynasty 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 New Gold with a short position of Northern Dynasty. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and Northern Dynasty.
Diversification Opportunities for New Gold and Northern Dynasty
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Northern is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding New Gold and Northern Dynasty Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Dynasty Minerals and New Gold 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 New Gold are associated (or correlated) with Northern Dynasty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Dynasty Minerals has no effect on the direction of New Gold i.e., New Gold and Northern Dynasty go up and down completely randomly.
Pair Corralation between New Gold and Northern Dynasty
Assuming the 90 days trading horizon New Gold is expected to generate 1.09 times less return on investment than Northern Dynasty. But when comparing it to its historical volatility, New Gold is 1.07 times less risky than Northern Dynasty. It trades about 0.33 of its potential returns per unit of risk. Northern Dynasty Minerals is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 60.00 in Northern Dynasty Minerals on September 13, 2024 and sell it today you would earn a total of 16.00 from holding Northern Dynasty Minerals or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
New Gold vs. Northern Dynasty Minerals
Performance |
| Timeline |
| New Gold |
| Northern Dynasty Minerals |
New Gold and Northern Dynasty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Gold and Northern Dynasty
The main advantage of trading using opposite New Gold and Northern Dynasty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Gold position performs unexpectedly, Northern Dynasty 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 Northern Dynasty will offset losses from the drop in Northern Dynasty's long position.| New Gold vs. IAMGold | New Gold vs. Eldorado Gold Corp | New Gold vs. Alamos Gold | New Gold vs. NovaGold Resources |
| Northern Dynasty vs. Taseko Mines | Northern Dynasty vs. New Gold | Northern Dynasty vs. Western Copper and | Northern Dynasty vs. NovaGold Resources |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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