Correlation Between Aura Minerals and NovaGold Resources
Can any of the company-specific risk be diversified away by investing in both Aura Minerals 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 Aura Minerals and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aura Minerals and NovaGold Resources, you can compare the effects of market volatilities on Aura Minerals 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 Aura Minerals with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Minerals and NovaGold Resources.
Diversification Opportunities for Aura Minerals and NovaGold Resources
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aura and NovaGold is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aura Minerals and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and Aura Minerals 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 Aura Minerals 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 Aura Minerals i.e., Aura Minerals and NovaGold Resources go up and down completely randomly.
Pair Corralation between Aura Minerals and NovaGold Resources
Assuming the 90 days trading horizon Aura Minerals is expected to generate 1.13 times less return on investment than NovaGold Resources. But when comparing it to its historical volatility, Aura Minerals is 1.72 times less risky than NovaGold Resources. It trades about 0.24 of its potential returns per unit of risk. NovaGold Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 377.00 in NovaGold Resources on January 20, 2024 and sell it today you would earn a total of 47.00 from holding NovaGold Resources or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aura Minerals vs. NovaGold Resources
Performance |
| Timeline |
| Aura Minerals |
| NovaGold Resources |
Aura Minerals and NovaGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aura Minerals and NovaGold Resources
The main advantage of trading using opposite Aura Minerals and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aura Minerals 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.| Aura Minerals vs. Q Gold Resources | Aura Minerals vs. MAS Gold Corp | Aura Minerals vs. ExGen Resources | Aura Minerals vs. Carlin Gold |
| NovaGold Resources vs. Q Gold Resources | NovaGold Resources vs. MAS Gold Corp | NovaGold Resources vs. ExGen Resources | NovaGold Resources vs. Carlin Gold |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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