Correlation Between Falcon Gold and NV Gold

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

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

Diversification Opportunities for Falcon Gold and NV Gold

-0.48

Correlation Coefficient

Falcon Gold  NV Gold

Very good diversification

The 3 months correlation between Falcon and NVX is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Gold Corp and NV Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Gold Corp and Falcon 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 Falcon Gold Corp are associated (or correlated) with NV Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Gold Corp has no effect on the direction of Falcon Gold i.e., Falcon Gold and NV Gold go up and down completely randomly.

Pair Corralation between Falcon Gold and NV Gold

Given the investment horizon of 90 days Falcon Gold Corp is expected to generate 1.87 times more return on investment than NV Gold. However, Falcon Gold is 1.87 times more volatile than NV Gold Corp. It trades about 0.13 of its potential returns per unit of risk. NV Gold Corp is currently generating about 0.02 per unit of risk. If you would invest  2.00  in Falcon Gold Corp on December 19, 2024 and sell it today you would earn a total of  1.50  from holding Falcon Gold Corp or generate 75.0% return on investment over 90 days.

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

Falcon Gold Corp  vs.  NV Gold Corp

Falcon Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Falcon Gold Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Falcon Gold showed solid returns over the last few months and may actually be approaching a breakup point.

NV Gold Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NV Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NV Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Falcon Gold and NV Gold

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

The idea behind Falcon Gold Corp and NV Gold Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.