Correlation Between B2Gold Corp and NovaGold Resources

Can any of the company-specific risk be diversified away by investing in both B2Gold Corp and NovaGold Resources 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 B2Gold Corp and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between B2Gold Corp and NovaGold Resources, you can compare the effects of market volatilities on B2Gold Corp and NovaGold Resources 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 B2Gold Corp with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of B2Gold Corp and NovaGold Resources.

Diversification Opportunities for B2Gold Corp and NovaGold Resources

0.42

Correlation Coefficient

B2Gold Corp  NovaGold Resources

Very weak diversification

The 3 months correlation between B2Gold and NovaGold is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding B2Gold Corp and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and B2Gold Corp 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 B2Gold Corp are associated (or correlated) with NovaGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NovaGold Resources has no effect on the direction of B2Gold Corp i.e., B2Gold Corp and NovaGold Resources go up and down completely randomly.

Pair Corralation between B2Gold Corp and NovaGold Resources

Considering the 90-day investment horizon B2Gold Corp is expected to generate 0.74 times more return on investment than NovaGold Resources. However, B2Gold Corp is 1.35 times less risky than NovaGold Resources. It trades about 0.0 of its potential returns per unit of risk. NovaGold Resources is currently generating about -0.01 per unit of risk. If you would invest  324.00  in B2Gold Corp on September 12, 2024 and sell it today you would lose (44.50) from holding B2Gold Corp or give up 13.73% of portfolio value over 90 days.

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

B2Gold Corp  vs.  NovaGold Resources

B2Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B2Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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. 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with B2Gold Corp and NovaGold Resources

The main advantage of trading using opposite B2Gold Corp and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B2Gold Corp position performs unexpectedly, NovaGold Resources 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 NovaGold Resources will offset losses from the drop in NovaGold Resources' long position.

The idea behind B2Gold Corp and NovaGold Resources 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.