Correlation Between Nova Minerals and BHP Group
Can any of the company-specific risk be diversified away by investing in both Nova Minerals and BHP Group 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 Nova Minerals and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Minerals Limited and BHP Group Limited, you can compare the effects of market volatilities on Nova Minerals and BHP Group 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 Nova Minerals with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Minerals and BHP Group.
Diversification Opportunities for Nova Minerals and BHP Group
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nova and BHP is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nova Minerals Limited and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited and Nova Minerals 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 Nova Minerals Limited are associated (or correlated) with BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Nova Minerals i.e., Nova Minerals and BHP Group go up and down completely randomly.
Pair Corralation between Nova Minerals and BHP Group
Considering the 90-day investment horizon Nova Minerals is expected to generate 1.57 times less return on investment than BHP Group. In addition to that, Nova Minerals is 11.72 times more volatile than BHP Group Limited. It trades about 0.01 of its total potential returns per unit of risk. BHP Group Limited is currently generating about 0.17 per unit of volatility. If you would invest 4,894 in BHP Group Limited on October 20, 2024 and sell it today you would earn a total of 115.00 from holding BHP Group Limited or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Minerals Limited vs. BHP Group Limited
Performance |
| Timeline |
| Nova Minerals Limited |
| BHP Group Limited |
Nova Minerals and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Minerals and BHP Group
The main advantage of trading using opposite Nova Minerals and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Minerals position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| Nova Minerals vs. Coffee Holding Co | Nova Minerals vs. Weibo Corp | Nova Minerals vs. Rave Restaurant Group | Nova Minerals vs. BJs Restaurants |
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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 Stocks Directory module to find actively traded stocks across global markets.
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