Correlation Between E79 Resources and Nova Minerals

Can any of the company-specific risk be diversified away by investing in both E79 Resources and Nova Minerals 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 E79 Resources and Nova Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E79 Resources Corp and Nova Minerals Limited, you can compare the effects of market volatilities on E79 Resources and Nova Minerals 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 E79 Resources with a short position of Nova Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of E79 Resources and Nova Minerals.

Diversification Opportunities for E79 Resources and Nova Minerals

0.08

Correlation Coefficient

E79 Resources  Nova Minerals

Significant diversification

The 3 months correlation between E79 and Nova is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding E79 Resources Corp and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited and E79 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 E79 Resources Corp are associated (or correlated) with Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of E79 Resources i.e., E79 Resources and Nova Minerals go up and down completely randomly.

Pair Corralation between E79 Resources and Nova Minerals

If you would invest  1.08  in E79 Resources Corp on September 3, 2024 and sell it today you would lose (0.05) from holding E79 Resources Corp or give up 4.63% of portfolio value over 90 days.

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

E79 Resources Corp  vs.  Nova Minerals Limited

E79 Resources Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in E79 Resources Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, E79 Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Nova Minerals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Minerals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nova Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with E79 Resources and Nova Minerals

The main advantage of trading using opposite E79 Resources and Nova Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E79 Resources position performs unexpectedly, Nova Minerals 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 Nova Minerals will offset losses from the drop in Nova Minerals' long position.

The idea behind E79 Resources Corp and Nova Minerals Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.