Correlation Between Gold Reserve and NovaGold Resources
Can any of the company-specific risk be diversified away by investing in both Gold Reserve and NovaGold Resources 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 Gold Reserve and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Reserve and NovaGold Resources, you can compare the effects of market volatilities on Gold Reserve and NovaGold Resources 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 Gold Reserve with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Reserve and NovaGold Resources.
Diversification Opportunities for Gold Reserve and NovaGold Resources
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gold and NovaGold is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gold Reserve and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and Gold Reserve 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 Gold Reserve are associated (or correlated) with NovaGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NovaGold Resources has no effect on the direction of Gold Reserve i.e., Gold Reserve and NovaGold Resources go up and down completely randomly.
Pair Corralation between Gold Reserve and NovaGold Resources
Assuming the 90 days horizon Gold Reserve is expected to under-perform the NovaGold Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Gold Reserve is 2.58 times less risky than NovaGold Resources. The otc stock trades about -0.04 of its potential returns per unit of risk. The NovaGold Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 280.00 in NovaGold Resources on January 20, 2024 and sell it today you would earn a total of 27.00 from holding NovaGold Resources or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Gold Reserve vs. NovaGold Resources
Performance |
| Timeline |
| Gold Reserve |
| NovaGold Resources |
Gold Reserve and NovaGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Reserve and NovaGold Resources
The main advantage of trading using opposite Gold Reserve and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Reserve position performs unexpectedly, NovaGold Resources 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 NovaGold Resources will offset losses from the drop in NovaGold Resources' long position.| Gold Reserve vs. Alumina Limited | Gold Reserve vs. HUMANA INC | Gold Reserve vs. Aquagold International | Gold Reserve vs. Spring Valley Acquisition |
| NovaGold Resources vs. Seabridge Gold | NovaGold Resources vs. Eldorado Gold Corp | NovaGold Resources vs. New Gold | NovaGold Resources vs. IAMGold |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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