Correlation Between Australian Agricultural and NOVAGOLD RESOURCES
Can any of the company-specific risk be diversified away by investing in both Australian 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 Australian 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 Australian Agricultural and NOVAGOLD RESOURCES, you can compare the effects of market volatilities on Australian 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 Australian Agricultural with a short position of NOVAGOLD RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and NOVAGOLD RESOURCES.
Diversification Opportunities for Australian Agricultural and NOVAGOLD RESOURCES
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Australian and NOVAGOLD is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and NOVAGOLD RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVAGOLD RESOURCES and Australian 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 Australian Agricultural 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 Australian Agricultural i.e., Australian Agricultural and NOVAGOLD RESOURCES go up and down completely randomly.
Pair Corralation between Australian Agricultural and NOVAGOLD RESOURCES
Assuming the 90 days horizon Australian Agricultural is expected to generate 0.52 times more return on investment than NOVAGOLD RESOURCES. However, Australian Agricultural is 1.91 times less risky than NOVAGOLD RESOURCES. It trades about -0.02 of its potential returns per unit of risk. NOVAGOLD RESOURCES is currently generating about -0.06 per unit of risk. If you would invest 84.00 in Australian Agricultural on September 19, 2024 and sell it today you would lose (2.00) from holding Australian Agricultural or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. NOVAGOLD RESOURCES
Performance |
| Timeline |
| Australian Agricultural |
| NOVAGOLD RESOURCES |
Australian Agricultural and NOVAGOLD RESOURCES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and NOVAGOLD RESOURCES
The main advantage of trading using opposite Australian Agricultural and NOVAGOLD RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian 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.| Australian Agricultural vs. Transportadora de Gas | Australian Agricultural vs. TEXAS ROADHOUSE | Australian Agricultural vs. BLUESCOPE STEEL | Australian Agricultural vs. COPLAND ROAD CAPITAL |
| NOVAGOLD RESOURCES vs. Australian Agricultural | NOVAGOLD RESOURCES vs. WILLIS LEASE FIN | NOVAGOLD RESOURCES vs. Check Point Software | NOVAGOLD RESOURCES vs. Granite Construction |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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