Correlation Between Federal Agricultural and NOVAGOLD RESOURCES
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural 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 Federal Agricultural and NOVAGOLD RESOURCES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and NOVAGOLD RESOURCES, you can compare the effects of market volatilities on Federal Agricultural 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 Federal Agricultural with a short position of NOVAGOLD RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and NOVAGOLD RESOURCES.
Diversification Opportunities for Federal Agricultural and NOVAGOLD RESOURCES
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federal and NOVAGOLD is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and NOVAGOLD RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVAGOLD RESOURCES and Federal Agricultural 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 Federal Agricultural Mortgage 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 Federal Agricultural i.e., Federal Agricultural and NOVAGOLD RESOURCES go up and down completely randomly.
Pair Corralation between Federal Agricultural and NOVAGOLD RESOURCES
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to under-perform the NOVAGOLD RESOURCES. But the stock apears to be less risky and, when comparing its historical volatility, Federal Agricultural Mortgage is 2.1 times less risky than NOVAGOLD RESOURCES. The stock trades about -0.35 of its potential returns per unit of risk. The NOVAGOLD RESOURCES is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 331.00 in NOVAGOLD RESOURCES on October 12, 2024 and sell it today you would lose (7.00) from holding NOVAGOLD RESOURCES or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. NOVAGOLD RESOURCES
Performance |
| Timeline |
| Federal Agricultural |
| NOVAGOLD RESOURCES |
Federal Agricultural and NOVAGOLD RESOURCES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and NOVAGOLD RESOURCES
The main advantage of trading using opposite Federal Agricultural and NOVAGOLD RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural 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's long position.| Federal Agricultural vs. REVO INSURANCE SPA | Federal Agricultural vs. CDN IMPERIAL BANK | Federal Agricultural vs. PNC Financial Services | Federal Agricultural vs. Guidewire Software |
| NOVAGOLD RESOURCES vs. INDOFOOD AGRI RES | NOVAGOLD RESOURCES vs. CN MODERN DAIRY | NOVAGOLD RESOURCES vs. DATAGROUP SE | NOVAGOLD RESOURCES vs. Thai Beverage Public |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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