Correlation Between NovaGold Resources and Millbank Mining

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

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

Diversification Opportunities for NovaGold Resources and Millbank Mining

-0.18

Correlation Coefficient

NovaGold Resources  Millbank Mining

Good diversification

The 3 months correlation between NovaGold and Millbank is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Millbank Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millbank Mining Corp and NovaGold Resources 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 NovaGold Resources are associated (or correlated) with Millbank Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millbank Mining Corp has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Millbank Mining go up and down completely randomly.

Pair Corralation between NovaGold Resources and Millbank Mining

Assuming the 90 days horizon NovaGold Resources is expected to under-perform the Millbank Mining. But the stock apears to be less risky and, when comparing its historical volatility, NovaGold Resources is 1.39 times less risky than Millbank Mining. The stock trades about -0.05 of its potential returns per unit of risk. The Millbank Mining Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Millbank Mining Corp on September 30, 2024 and sell it today you would earn a total of  3.00  from holding Millbank Mining Corp or generate 6.67% return on investment over 90 days.

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

NovaGold Resources  vs.  Millbank Mining Corp

NovaGold Resources

Risk-Adjusted Performance

0 of 100

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.

Millbank Mining Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Millbank Mining Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Millbank Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NovaGold Resources and Millbank Mining

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

The idea behind NovaGold Resources and Millbank Mining 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.