Correlation Between Contango ORE and New Found

Can any of the company-specific risk be diversified away by investing in both Contango ORE and New Found 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 Contango ORE and New Found into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Contango ORE and New Found Gold, you can compare the effects of market volatilities on Contango ORE and New Found 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 Contango ORE with a short position of New Found. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contango ORE and New Found.

Diversification Opportunities for Contango ORE and New Found

-0.53

Correlation Coefficient

Contango ORE  New Found

Excellent diversification

The 3 months correlation between Contango and New is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE and New Found Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Found Gold and Contango ORE 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 Contango ORE are associated (or correlated) with New Found. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Found Gold has no effect on the direction of Contango ORE i.e., Contango ORE and New Found go up and down completely randomly.

Pair Corralation between Contango ORE and New Found

Given the investment horizon of 90 days Contango ORE is expected to generate 0.77 times more return on investment than New Found. However, Contango ORE is 1.29 times less risky than New Found. It trades about 0.13 of its potential returns per unit of risk. New Found Gold is currently generating about -0.08 per unit of risk. If you would invest  1,057  in Contango ORE on February 5, 2025 and sell it today you would earn a total of  371.00  from holding Contango ORE or generate 35.1% return on investment over 90 days.

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

Contango ORE  vs.  New Found Gold

Contango ORE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Contango ORE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Contango ORE displayed solid returns over the last few months and may actually be approaching a breakup point.

New Found Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Found Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Contango ORE and New Found

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

The idea behind Contango ORE and New Found Gold 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.