Correlation Between Eskay Mining and New Found

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

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

Diversification Opportunities for Eskay Mining and New Found

0.17

Correlation Coefficient

Eskay Mining  New Found

Average diversification

The 3 months correlation between Eskay and New is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and New Found Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Found Gold and Eskay Mining 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 Eskay Mining Corp are associated (or correlated) with New Found. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Found Gold has no effect on the direction of Eskay Mining i.e., Eskay Mining and New Found go up and down completely randomly.

Pair Corralation between Eskay Mining and New Found

Assuming the 90 days horizon Eskay Mining Corp is expected to generate 1.1 times more return on investment than New Found. However, Eskay Mining is 1.1 times more volatile than New Found Gold. It trades about 0.17 of its potential returns per unit of risk. New Found Gold is currently generating about 0.05 per unit of risk. If you would invest  18.00  in Eskay Mining Corp on December 20, 2024 and sell it today you would earn a total of  9.00  from holding Eskay Mining Corp or generate 50.0% return on investment over 90 days.

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

Eskay Mining Corp  vs.  New Found Gold

Eskay Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eskay Mining Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eskay Mining showed solid returns over the last few months and may actually be approaching a breakup point.

New Found Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Found Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, New Found may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eskay Mining and New Found

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

The idea behind Eskay Mining Corp and New Found Gold 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.