Correlation Between Bullion Gold and NioCorp Developments

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

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

Diversification Opportunities for Bullion Gold and NioCorp Developments

0.25

Correlation Coefficient

Bullion Gold  NioCorp Developments

Modest diversification

The 3 months correlation between Bullion and NioCorp is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bullion Gold Resources and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments and Bullion 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 Bullion Gold Resources are associated (or correlated) with NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of Bullion Gold i.e., Bullion Gold and NioCorp Developments go up and down completely randomly.

Pair Corralation between Bullion Gold and NioCorp Developments

Assuming the 90 days horizon Bullion Gold Resources is expected to generate 2.86 times more return on investment than NioCorp Developments. However, Bullion Gold is 2.86 times more volatile than NioCorp Developments Ltd. It trades about 0.09 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about 0.12 per unit of risk. If you would invest  1.84  in Bullion Gold Resources on December 29, 2024 and sell it today you would earn a total of  0.80  from holding Bullion Gold Resources or generate 43.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Bullion Gold Resources  vs.  NioCorp Developments Ltd

Bullion Gold Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bullion Gold Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Bullion Gold reported solid returns over the last few months and may actually be approaching a breakup point.

NioCorp Developments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NioCorp Developments Ltd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, NioCorp Developments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bullion Gold and NioCorp Developments

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

The idea behind Bullion Gold Resources and NioCorp Developments Ltd 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.