Correlation Between NV Gold and Defiance Silver

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

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

Diversification Opportunities for NV Gold and Defiance Silver

0.73

Correlation Coefficient

NV Gold  Defiance Silver

Poor diversification

The 3 months correlation between NVX and Defiance is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NV Gold Corp and Defiance Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Silver Corp and NV Gold 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 NV Gold Corp are associated (or correlated) with Defiance Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Silver Corp has no effect on the direction of NV Gold i.e., NV Gold and Defiance Silver go up and down completely randomly.

Pair Corralation between NV Gold and Defiance Silver

Assuming the 90 days horizon NV Gold Corp is expected to generate 0.78 times more return on investment than Defiance Silver. However, NV Gold Corp is 1.28 times less risky than Defiance Silver. It trades about 0.02 of its potential returns per unit of risk. Defiance Silver Corp is currently generating about -0.13 per unit of risk. If you would invest  22.00  in NV Gold Corp on October 11, 2024 and sell it today you would earn a total of  0.00  from holding NV Gold Corp or generate 0.0% return on investment over 90 days.

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

NV Gold Corp  vs.  Defiance Silver Corp

NV Gold Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NV Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NV Gold may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Defiance Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Defiance Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with NV Gold and Defiance Silver

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

The idea behind NV Gold Corp and Defiance 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.