Correlation Between Amazon CDR and NovaGold Resources
Can any of the company-specific risk be diversified away by investing in both Amazon CDR 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 Amazon CDR and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and NovaGold Resources, you can compare the effects of market volatilities on Amazon CDR 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 Amazon CDR with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and NovaGold Resources.
Diversification Opportunities for Amazon CDR and NovaGold Resources
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and NovaGold is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and Amazon CDR 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 Amazon CDR 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 Amazon CDR i.e., Amazon CDR and NovaGold Resources go up and down completely randomly.
Pair Corralation between Amazon CDR and NovaGold Resources
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.62 times more return on investment than NovaGold Resources. However, Amazon CDR is 1.6 times less risky than NovaGold Resources. It trades about 0.09 of its potential returns per unit of risk. NovaGold Resources is currently generating about -0.01 per unit of risk. If you would invest 1,119 in Amazon CDR on August 25, 2024 and sell it today you would earn a total of 1,232 from holding Amazon CDR or generate 110.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. NovaGold Resources
Performance |
| Timeline |
| Amazon CDR |
| NovaGold Resources |
Amazon CDR and NovaGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and NovaGold Resources
The main advantage of trading using opposite Amazon CDR and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR 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.| Amazon CDR vs. Ramp Metals | Amazon CDR vs. Gatos Silver | Amazon CDR vs. Sparx Technology | Amazon CDR vs. Ocumetics Technology Corp |
| NovaGold Resources vs. Centerra Gold | NovaGold Resources vs. Alamos Gold | NovaGold Resources vs. MAG Silver Corp | NovaGold Resources vs. Seabridge Gold |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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