Correlation Between Hecla Mining and NovaGold Resources
Can any of the company-specific risk be diversified away by investing in both Hecla Mining 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 Hecla Mining and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hecla Mining and NovaGold Resources, you can compare the effects of market volatilities on Hecla Mining 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 Hecla Mining with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hecla Mining and NovaGold Resources.
Diversification Opportunities for Hecla Mining and NovaGold Resources
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hecla and NovaGold is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hecla Mining and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and Hecla Mining 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 Hecla Mining 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 Hecla Mining i.e., Hecla Mining and NovaGold Resources go up and down completely randomly.
Pair Corralation between Hecla Mining and NovaGold Resources
Allowing for the 90-day total investment horizon Hecla Mining is expected to generate 0.92 times more return on investment than NovaGold Resources. However, Hecla Mining is 1.08 times less risky than NovaGold Resources. It trades about 0.3 of its potential returns per unit of risk. NovaGold Resources is currently generating about 0.18 per unit of risk. If you would invest 354.00 in Hecla Mining on January 20, 2024 and sell it today you would earn a total of 174.00 from holding Hecla Mining or generate 49.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hecla Mining vs. NovaGold Resources
Performance |
| Timeline |
| Hecla Mining |
| NovaGold Resources |
Hecla Mining and NovaGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hecla Mining and NovaGold Resources
The main advantage of trading using opposite Hecla Mining and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hecla Mining 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.| Hecla Mining vs. SilverCrest Metals | Hecla Mining vs. Avino Silver Gold | Hecla Mining vs. New Pacific Metals | Hecla Mining vs. Gatos Silver |
| NovaGold Resources vs. Seabridge Gold | NovaGold Resources vs. Eldorado Gold Corp | NovaGold Resources vs. New Gold | NovaGold Resources vs. IAMGold |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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