Correlation Between Novo Resources and Eskay Mining
Can any of the company-specific risk be diversified away by investing in both Novo Resources and Eskay Mining 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 Novo Resources and Eskay Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novo Resources Corp and Eskay Mining Corp, you can compare the effects of market volatilities on Novo Resources and Eskay Mining 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 Novo Resources with a short position of Eskay Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Resources and Eskay Mining.
Diversification Opportunities for Novo Resources and Eskay Mining
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Novo and Eskay is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Novo Resources Corp and Eskay Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eskay Mining Corp and Novo 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 Novo Resources Corp are associated (or correlated) with Eskay Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eskay Mining Corp has no effect on the direction of Novo Resources i.e., Novo Resources and Eskay Mining go up and down completely randomly.
Pair Corralation between Novo Resources and Eskay Mining
Assuming the 90 days trading horizon Novo Resources Corp is expected to generate 0.97 times more return on investment than Eskay Mining. However, Novo Resources Corp is 1.04 times less risky than Eskay Mining. It trades about -0.02 of its potential returns per unit of risk. Eskay Mining Corp is currently generating about -0.04 per unit of risk. If you would invest 28.00 in Novo Resources Corp on September 12, 2024 and sell it today you would lose (19.75) from holding Novo Resources Corp or give up 70.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Novo Resources Corp vs. Eskay Mining Corp
Performance |
| Timeline |
| Novo Resources Corp |
| Eskay Mining Corp |
Novo Resources and Eskay Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Resources and Eskay Mining
The main advantage of trading using opposite Novo Resources and Eskay Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Resources position performs unexpectedly, Eskay Mining 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 Eskay Mining will offset losses from the drop in Eskay Mining's long position.| Novo Resources vs. Lion One Metals | Novo Resources vs. New Found Gold | Novo Resources vs. Eskay Mining Corp | Novo Resources vs. Labrador Gold Corp |
| Eskay Mining vs. Ressources Minieres Radisson | Eskay Mining vs. Galantas Gold Corp | Eskay Mining vs. Red Pine Exploration | Eskay Mining vs. Kore Mining |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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