Correlation Between Granite Construction and NOVAGOLD RESOURCES
Can any of the company-specific risk be diversified away by investing in both Granite Construction 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 Granite Construction and NOVAGOLD RESOURCES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and NOVAGOLD RESOURCES, you can compare the effects of market volatilities on Granite Construction 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 Granite Construction with a short position of NOVAGOLD RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and NOVAGOLD RESOURCES.
Diversification Opportunities for Granite Construction and NOVAGOLD RESOURCES
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Granite and NOVAGOLD is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and NOVAGOLD RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVAGOLD RESOURCES and Granite Construction 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 Granite Construction 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 Granite Construction i.e., Granite Construction and NOVAGOLD RESOURCES go up and down completely randomly.
Pair Corralation between Granite Construction and NOVAGOLD RESOURCES
Assuming the 90 days trading horizon Granite Construction is expected to generate 0.76 times more return on investment than NOVAGOLD RESOURCES. However, Granite Construction is 1.31 times less risky than NOVAGOLD RESOURCES. It trades about 0.14 of its potential returns per unit of risk. NOVAGOLD RESOURCES is currently generating about -0.04 per unit of risk. If you would invest 7,700 in Granite Construction on September 19, 2024 and sell it today you would earn a total of 1,000.00 from holding Granite Construction or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Granite Construction vs. NOVAGOLD RESOURCES
Performance |
| Timeline |
| Granite Construction |
| NOVAGOLD RESOURCES |
Granite Construction and NOVAGOLD RESOURCES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and NOVAGOLD RESOURCES
The main advantage of trading using opposite Granite Construction and NOVAGOLD RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction 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.| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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