Correlation Between Novo Resources and Endurance Gold

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

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

Diversification Opportunities for Novo Resources and Endurance Gold

0.55

Correlation Coefficient

Novo Resources  Endurance Gold

Very weak diversification

The 3 months correlation between Novo and Endurance is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Novo Resources Corp and Endurance Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endurance Gold and Novo 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 Novo Resources Corp are associated (or correlated) with Endurance Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endurance Gold has no effect on the direction of Novo Resources i.e., Novo Resources and Endurance Gold go up and down completely randomly.

Pair Corralation between Novo Resources and Endurance Gold

Assuming the 90 days horizon Novo Resources Corp is expected to under-perform the Endurance Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, Novo Resources Corp is 1.08 times less risky than Endurance Gold. The otc stock trades about -0.07 of its potential returns per unit of risk. The Endurance Gold is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Endurance Gold on September 4, 2024 and sell it today you would lose (2.00) from holding Endurance Gold or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Novo Resources Corp  vs.  Endurance Gold

Novo Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novo Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Endurance Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endurance Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Novo Resources and Endurance Gold

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

The idea behind Novo Resources Corp and Endurance Gold 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.