Correlation Between Dakota Gold and Norsemont Mining

Can any of the company-specific risk be diversified away by investing in both Dakota Gold and Norsemont Mining 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 Dakota Gold and Norsemont Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dakota Gold Corp and Norsemont Mining, you can compare the effects of market volatilities on Dakota Gold and Norsemont Mining 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 Dakota Gold with a short position of Norsemont Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dakota Gold and Norsemont Mining.

Diversification Opportunities for Dakota Gold and Norsemont Mining

-0.03

Correlation Coefficient

Dakota Gold  Norsemont Mining

Good diversification

The 3 months correlation between Dakota and Norsemont is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dakota Gold Corp and Norsemont Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsemont Mining and Dakota Gold 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 Dakota Gold Corp are associated (or correlated) with Norsemont Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsemont Mining has no effect on the direction of Dakota Gold i.e., Dakota Gold and Norsemont Mining go up and down completely randomly.

Pair Corralation between Dakota Gold and Norsemont Mining

Allowing for the 90-day total investment horizon Dakota Gold is expected to generate 19.06 times less return on investment than Norsemont Mining. But when comparing it to its historical volatility, Dakota Gold Corp is 3.28 times less risky than Norsemont Mining. It trades about 0.03 of its potential returns per unit of risk. Norsemont Mining is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  7.60  in Norsemont Mining on September 2, 2024 and sell it today you would earn a total of  10.40  from holding Norsemont Mining or generate 136.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dakota Gold Corp  vs.  Norsemont Mining

Dakota Gold Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dakota Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dakota Gold is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Norsemont Mining

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Norsemont Mining are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Norsemont Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dakota Gold and Norsemont Mining

The main advantage of trading using opposite Dakota Gold and Norsemont Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dakota Gold position performs unexpectedly, Norsemont Mining 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 Norsemont Mining will offset losses from the drop in Norsemont Mining's long position.

The idea behind Dakota Gold Corp and Norsemont Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.