Correlation Between NovaGold Resources and Gold Reserve
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Gold Reserve 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 Gold Reserve into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Gold Reserve, you can compare the effects of market volatilities on NovaGold Resources and Gold Reserve 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 Gold Reserve. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Gold Reserve.
Diversification Opportunities for NovaGold Resources and Gold Reserve
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NovaGold and Gold is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Gold Reserve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Reserve 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 Gold Reserve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Reserve has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Gold Reserve go up and down completely randomly.
Pair Corralation between NovaGold Resources and Gold Reserve
Allowing for the 90-day total investment horizon NovaGold Resources is expected to under-perform the Gold Reserve. In addition to that, NovaGold Resources is 1.32 times more volatile than Gold Reserve. It trades about -0.04 of its total potential returns per unit of risk. Gold Reserve is currently generating about 0.03 per unit of volatility. If you would invest 289.00 in Gold Reserve on January 31, 2024 and sell it today you would earn a total of 32.00 from holding Gold Reserve or generate 11.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.46% |
Values | Daily Returns |
NovaGold Resources vs. Gold Reserve
Performance |
Timeline |
NovaGold Resources |
Gold Reserve |
NovaGold Resources and Gold Reserve Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NovaGold Resources and Gold Reserve
The main advantage of trading using opposite NovaGold Resources and Gold Reserve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Gold Reserve 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 Gold Reserve will offset losses from the drop in Gold Reserve's long position.NovaGold Resources vs. Seabridge Gold | NovaGold Resources vs. Eldorado Gold Corp | NovaGold Resources vs. New Gold | NovaGold Resources vs. IAMGold |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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