Correlation Between NovaGold Resources and Endeavour Silver

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

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

Diversification Opportunities for NovaGold Resources and Endeavour Silver

0.58

Correlation Coefficient

NovaGold Resources  Endeavour Silver

Very weak diversification

The 3 months correlation between NovaGold and Endeavour is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Endeavour Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Silver 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 Endeavour Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Silver Corp has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Endeavour Silver go up and down completely randomly.

Pair Corralation between NovaGold Resources and Endeavour Silver

Allowing for the 90-day total investment horizon NovaGold Resources is expected to under-perform the Endeavour Silver. But the stock apears to be less risky and, when comparing its historical volatility, NovaGold Resources is 1.24 times less risky than Endeavour Silver. The stock trades about -0.02 of its potential returns per unit of risk. The Endeavour Silver Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  294.00  in Endeavour Silver Corp on November 19, 2024 and sell it today you would earn a total of  110.00  from holding Endeavour Silver Corp or generate 37.41% return on investment over 90 days.

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

NovaGold Resources  vs.  Endeavour Silver Corp

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. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Endeavour Silver Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Endeavour Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with NovaGold Resources and Endeavour Silver

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

The idea behind NovaGold Resources and Endeavour Silver 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.