Correlation Between NovaGold Resources and Dakota Gold

Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Dakota Gold 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 NovaGold Resources and Dakota Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for NovaGold Resources and Dakota Gold

0.72

Correlation Coefficient

NovaGold Resources  Dakota Gold

Poor diversification

The 3 months correlation between NovaGold and Dakota is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Dakota Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dakota Gold Corp and NovaGold Resources 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 NovaGold Resources are associated (or correlated) with Dakota Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dakota Gold Corp has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Dakota Gold go up and down completely randomly.

Pair Corralation between NovaGold Resources and Dakota Gold

Allowing for the 90-day total investment horizon NovaGold Resources is expected to generate 1.39 times more return on investment than Dakota Gold. However, NovaGold Resources is 1.39 times more volatile than Dakota Gold Corp. It trades about 0.14 of its potential returns per unit of risk. Dakota Gold Corp is currently generating about 0.16 per unit of risk. If you would invest  391.00  in NovaGold Resources on May 7, 2025 and sell it today you would earn a total of  157.00  from holding NovaGold Resources or generate 40.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

NovaGold Resources  vs.  Dakota Gold Corp

NovaGold Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NovaGold Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, NovaGold Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Dakota Gold Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dakota Gold Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Dakota Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NovaGold Resources and Dakota Gold

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

The idea behind NovaGold Resources and Dakota Gold Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.