Correlation Between MINT Income and NovaGold Resources

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

By analyzing existing cross correlation between MINT Income Fund and NovaGold Resources, you can compare the effects of market volatilities on MINT Income 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 MINT Income with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of MINT Income and NovaGold Resources.

Diversification Opportunities for MINT Income and NovaGold Resources

-0.1

Correlation Coefficient

MINT Income  NovaGold Resources

Good diversification

The 3 months correlation between MINT and NovaGold is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding MINT Income Fund and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and MINT Income 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 MINT Income Fund 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 MINT Income i.e., MINT Income and NovaGold Resources go up and down completely randomly.

Pair Corralation between MINT Income and NovaGold Resources

Assuming the 90 days trading horizon MINT Income Fund is expected to generate 0.32 times more return on investment than NovaGold Resources. However, MINT Income Fund is 3.16 times less risky than NovaGold Resources. It trades about -0.06 of its potential returns per unit of risk. NovaGold Resources is currently generating about -0.04 per unit of risk. If you would invest  781.00  in MINT Income Fund on December 30, 2024 and sell it today you would lose (33.00) from holding MINT Income Fund or give up 4.23% of portfolio value over 90 days.

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

MINT Income Fund  vs.  NovaGold Resources

MINT Income Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days MINT Income Fund has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, MINT Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NovaGold Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days NovaGold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with MINT Income and NovaGold Resources

The main advantage of trading using opposite MINT Income and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MINT Income 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.

The idea behind MINT Income Fund and NovaGold Resources 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.