Correlation Between Northern Dynasty and US GoldMining

Can any of the company-specific risk be diversified away by investing in both Northern Dynasty and US GoldMining 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 US GoldMining 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 US GoldMining Warrant, you can compare the effects of market volatilities on Northern Dynasty and US GoldMining 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 US GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Dynasty and US GoldMining.

Diversification Opportunities for Northern Dynasty and US GoldMining

-0.32

Correlation Coefficient

Northern Dynasty  US GoldMining

Very good diversification

The 3 months correlation between Northern and USGOW is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Northern Dynasty Minerals and US GoldMining Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GoldMining Warrant 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 US GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GoldMining Warrant has no effect on the direction of Northern Dynasty i.e., Northern Dynasty and US GoldMining go up and down completely randomly.

Pair Corralation between Northern Dynasty and US GoldMining

Considering the 90-day investment horizon Northern Dynasty Minerals is expected to generate 0.84 times more return on investment than US GoldMining. However, Northern Dynasty Minerals is 1.19 times less risky than US GoldMining. It trades about 0.11 of its potential returns per unit of risk. US GoldMining Warrant is currently generating about -0.05 per unit of risk. If you would invest  61.00  in Northern Dynasty Minerals on January 9, 2025 and sell it today you would earn a total of  25.00  from holding Northern Dynasty Minerals or generate 40.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Northern Dynasty Minerals  vs.  US GoldMining Warrant

Northern Dynasty Minerals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Dynasty Minerals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Northern Dynasty disclosed solid returns over the last few months and may actually be approaching a breakup point.

US GoldMining Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days US GoldMining Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Northern Dynasty and US GoldMining

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

The idea behind Northern Dynasty Minerals and US GoldMining Warrant 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 Valuation module to check real value of public entities based on technical and fundamental data.