Correlation Between Novo Resources and New Found
Can any of the company-specific risk be diversified away by investing in both Novo Resources and New Found 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 New Found 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 New Found Gold, you can compare the effects of market volatilities on Novo Resources and New Found 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 New Found. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Resources and New Found.
Diversification Opportunities for Novo Resources and New Found
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novo and New is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Novo Resources Corp and New Found Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Found Gold 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 New Found. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Found Gold has no effect on the direction of Novo Resources i.e., Novo Resources and New Found go up and down completely randomly.
Pair Corralation between Novo Resources and New Found
Assuming the 90 days trading horizon Novo Resources Corp is expected to under-perform the New Found. In addition to that, Novo Resources is 1.62 times more volatile than New Found Gold. It trades about -0.02 of its total potential returns per unit of risk. New Found Gold is currently generating about -0.03 per unit of volatility. If you would invest 509.00 in New Found Gold on September 12, 2024 and sell it today you would lose (267.00) from holding New Found Gold or give up 52.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Novo Resources Corp vs. New Found Gold
Performance |
| Timeline |
| Novo Resources Corp |
| New Found Gold |
Novo Resources and New Found Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Resources and New Found
The main advantage of trading using opposite Novo Resources and New Found positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Resources position performs unexpectedly, New Found 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 New Found will offset losses from the drop in New Found'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 |
| New Found vs. Data Communications Management | New Found vs. Summa Silver Corp | New Found vs. Capstone Mining Corp | New Found vs. NextSource Materials |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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