Correlation Between NovaGold Resources and HudBay Minerals
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and HudBay 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 NovaGold Resources and HudBay Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and HudBay Minerals, you can compare the effects of market volatilities on NovaGold Resources and HudBay 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 NovaGold Resources with a short position of HudBay Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and HudBay Minerals.
Diversification Opportunities for NovaGold Resources and HudBay Minerals
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NovaGold and HudBay is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and HudBay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HudBay Minerals and NovaGold 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 NovaGold Resources are associated (or correlated) with HudBay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HudBay Minerals has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and HudBay Minerals go up and down completely randomly.
Pair Corralation between NovaGold Resources and HudBay Minerals
Assuming the 90 days horizon NovaGold Resources is expected to under-perform the HudBay Minerals. But the stock apears to be less risky and, when comparing its historical volatility, NovaGold Resources is 1.08 times less risky than HudBay Minerals. The stock trades about -0.03 of its potential returns per unit of risk. The HudBay Minerals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 800.00 in HudBay Minerals on January 17, 2024 and sell it today you would earn a total of 253.00 from holding HudBay Minerals or generate 31.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. HudBay Minerals
Performance |
| Timeline |
| NovaGold Resources |
| HudBay Minerals |
NovaGold Resources and HudBay Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and HudBay Minerals
The main advantage of trading using opposite NovaGold Resources and HudBay Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, HudBay 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 HudBay Minerals will offset losses from the drop in HudBay Minerals' long position.| NovaGold Resources vs. Centerra Gold | NovaGold Resources vs. Alamos Gold | NovaGold Resources vs. MAG Silver Corp | NovaGold Resources vs. Seabridge Gold |
| HudBay Minerals vs. Lundin Mining | HudBay Minerals vs. First Quantum Minerals | HudBay Minerals vs. Ivanhoe Mines | HudBay Minerals vs. Capstone Mining Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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