Correlation Between Northern Dynasty and Nexa Resources

Can any of the company-specific risk be diversified away by investing in both Northern Dynasty and Nexa 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 Northern Dynasty and Nexa Resources 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 Nexa Resources SA, you can compare the effects of market volatilities on Northern Dynasty and Nexa 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 Northern Dynasty with a short position of Nexa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Dynasty and Nexa Resources.

Diversification Opportunities for Northern Dynasty and Nexa Resources

-0.2

Correlation Coefficient

Northern Dynasty  Nexa Resources

Good diversification

The 3 months correlation between Northern and Nexa is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Northern Dynasty Minerals and Nexa Resources SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexa Resources SA 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 Nexa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexa Resources SA has no effect on the direction of Northern Dynasty i.e., Northern Dynasty and Nexa Resources go up and down completely randomly.

Pair Corralation between Northern Dynasty and Nexa Resources

Considering the 90-day investment horizon Northern Dynasty Minerals is expected to generate 4.45 times more return on investment than Nexa Resources. However, Northern Dynasty is 4.45 times more volatile than Nexa Resources SA. It trades about -0.01 of its potential returns per unit of risk. Nexa Resources SA is currently generating about -0.1 per unit of risk. If you would invest  107.00  in Northern Dynasty Minerals on May 5, 2025 and sell it today you would lose (32.00) from holding Northern Dynasty Minerals or give up 29.91% of portfolio value over 90 days.

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

Northern Dynasty Minerals  vs.  Nexa Resources SA

Northern Dynasty Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Dynasty Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Nexa Resources SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexa Resources SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Northern Dynasty and Nexa Resources

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

The idea behind Northern Dynasty Minerals and Nexa Resources SA 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.