Correlation Between Enerev5 Metals and NovaGold Resources

Can any of the company-specific risk be diversified away by investing in both Enerev5 Metals 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 Enerev5 Metals and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enerev5 Metals and NovaGold Resources, you can compare the effects of market volatilities on Enerev5 Metals 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 Enerev5 Metals with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerev5 Metals and NovaGold Resources.

Diversification Opportunities for Enerev5 Metals and NovaGold Resources

0.0

Correlation Coefficient

Enerev5 Metals  NovaGold Resources

Pay attention - limited upside

The 3 months correlation between Enerev5 and NovaGold is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Enerev5 Metals and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and Enerev5 Metals 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 Enerev5 Metals 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 Enerev5 Metals i.e., Enerev5 Metals and NovaGold Resources go up and down completely randomly.

Pair Corralation between Enerev5 Metals and NovaGold Resources

If you would invest  1.00  in Enerev5 Metals on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Enerev5 Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Enerev5 Metals  vs.  NovaGold Resources

Enerev5 Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enerev5 Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Enerev5 Metals is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Enerev5 Metals and NovaGold Resources

The main advantage of trading using opposite Enerev5 Metals and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerev5 Metals 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 Enerev5 Metals 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.