Correlation Between Northern Dynasty and Silver Bull

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

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

Diversification Opportunities for Northern Dynasty and Silver Bull

-0.85

Correlation Coefficient

Northern Dynasty  Silver Bull

Pay attention - limited upside

The 3 months correlation between Northern and Silver is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Northern Dynasty Minerals and Silver Bull Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Bull Resources and Northern Dynasty 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 Northern Dynasty Minerals are associated (or correlated) with Silver Bull. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Bull Resources has no effect on the direction of Northern Dynasty i.e., Northern Dynasty and Silver Bull go up and down completely randomly.

Pair Corralation between Northern Dynasty and Silver Bull

If you would invest  35.00  in Northern Dynasty Minerals on September 13, 2024 and sell it today you would earn a total of  19.00  from holding Northern Dynasty Minerals or generate 54.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Northern Dynasty Minerals  vs.  Silver Bull Resources

Northern Dynasty Minerals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Dynasty Minerals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Northern Dynasty disclosed solid returns over the last few months and may actually be approaching a breakup point.

Silver Bull Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silver Bull Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Silver Bull is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Northern Dynasty and Silver Bull

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

The idea behind Northern Dynasty Minerals and Silver Bull 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.