Correlation Between New Gold and Nova Minerals
Can any of the company-specific risk be diversified away by investing in both New Gold and Nova Minerals 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 Nova Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Gold and Nova Minerals Limited, you can compare the effects of market volatilities on New Gold and Nova Minerals 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 Nova Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and Nova Minerals.
Diversification Opportunities for New Gold and Nova Minerals
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between New and Nova is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding New Gold and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited 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 Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of New Gold i.e., New Gold and Nova Minerals go up and down completely randomly.
Pair Corralation between New Gold and Nova Minerals
Considering the 90-day investment horizon New Gold is expected to generate 0.37 times more return on investment than Nova Minerals. However, New Gold is 2.68 times less risky than Nova Minerals. It trades about -0.01 of its potential returns per unit of risk. Nova Minerals Limited is currently generating about -0.01 per unit of risk. If you would invest 292.00 in New Gold on August 24, 2024 and sell it today you would lose (4.00) from holding New Gold or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Gold vs. Nova Minerals Limited
Performance |
| Timeline |
| New Gold |
| Nova Minerals Limited |
New Gold and Nova Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Gold and Nova Minerals
The main advantage of trading using opposite New Gold and Nova Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Gold position performs unexpectedly, Nova Minerals 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 Nova Minerals will offset losses from the drop in Nova Minerals' long position.| New Gold vs. Eldorado Gold Corp | New Gold vs. Kinross Gold | New Gold vs. Harmony Gold Mining | New Gold vs. Coeur Mining |
| Nova Minerals vs. Collective Mining | Nova Minerals vs. New Gold | Nova Minerals vs. Osisko Development Corp | Nova Minerals vs. Paramount Gold Nevada |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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