Correlation Between New Found and Aris Gold

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

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

Diversification Opportunities for New Found and Aris Gold

0.84

Correlation Coefficient

New Found  Aris Gold

Very poor diversification

The 3 months correlation between New and Aris is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding New Found Gold and Aris Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Gold Corp and New Found 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 New Found Gold are associated (or correlated) with Aris Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Gold Corp has no effect on the direction of New Found i.e., New Found and Aris Gold go up and down completely randomly.

Pair Corralation between New Found and Aris Gold

Assuming the 90 days horizon New Found Gold is expected to under-perform the Aris Gold. In addition to that, New Found is 1.22 times more volatile than Aris Gold Corp. It trades about -0.08 of its total potential returns per unit of risk. Aris Gold Corp is currently generating about 0.05 per unit of volatility. If you would invest  569.00  in Aris Gold Corp on September 13, 2024 and sell it today you would earn a total of  14.00  from holding Aris Gold Corp or generate 2.46% return on investment over 90 days.

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

New Found Gold  vs.  Aris Gold Corp

New Found Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Found Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Aris Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aris Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with New Found and Aris Gold

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

The idea behind New Found Gold and Aris 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.