Correlation Between Alcoa Corp and NovaGold Resources
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp 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 Alcoa Corp and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and NovaGold Resources, you can compare the effects of market volatilities on Alcoa Corp 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 Alcoa Corp with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and NovaGold Resources.
Diversification Opportunities for Alcoa Corp and NovaGold Resources
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and NovaGold is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and Alcoa Corp 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 Alcoa Corp 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 Alcoa Corp i.e., Alcoa Corp and NovaGold Resources go up and down completely randomly.
Pair Corralation between Alcoa Corp and NovaGold Resources
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.12 times more return on investment than NovaGold Resources. However, Alcoa Corp is 1.12 times more volatile than NovaGold Resources. It trades about 0.16 of its potential returns per unit of risk. NovaGold Resources is currently generating about -0.01 per unit of risk. If you would invest 4,131 in Alcoa Corp on August 29, 2024 and sell it today you would earn a total of 449.00 from holding Alcoa Corp or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. NovaGold Resources
Performance |
| Timeline |
| Alcoa Corp |
| NovaGold Resources |
Alcoa Corp and NovaGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and NovaGold Resources
The main advantage of trading using opposite Alcoa Corp and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp 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' long position.| Alcoa Corp vs. Direxion Daily FTSE | Alcoa Corp vs. Dodge Global Stock | Alcoa Corp vs. Collegium Pharmaceutical | Alcoa Corp vs. Dreyfus Natural Resources |
| NovaGold Resources vs. Seabridge Gold | NovaGold Resources vs. Eldorado Gold Corp | NovaGold Resources vs. New Gold | NovaGold Resources vs. IAMGold |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |