Correlation Between Galway Metals and NV Gold

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

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

Diversification Opportunities for Galway Metals and NV Gold

-0.05

Correlation Coefficient

Galway Metals  NV Gold

Good diversification

The 3 months correlation between Galway and NVX is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Galway Metals 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 Galway Metals 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 Galway Metals 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 Galway Metals i.e., Galway Metals and NV Gold go up and down completely randomly.

Pair Corralation between Galway Metals and NV Gold

Assuming the 90 days horizon Galway Metals is expected to generate 0.88 times more return on investment than NV Gold. However, Galway Metals is 1.13 times less risky than NV Gold. It trades about 0.1 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  44.00  in Galway Metals on December 19, 2024 and sell it today you would earn a total of  12.00  from holding Galway Metals or generate 27.27% return on investment over 90 days.

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

Galway Metals  vs.  NV Gold Corp

Galway Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Galway Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Galway Metals 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 Galway Metals and NV Gold

The main advantage of trading using opposite Galway Metals and NV Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galway Metals 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 Galway Metals 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.