Correlation Between IAMGold and NovaGold Resources
Can any of the company-specific risk be diversified away by investing in both IAMGold 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 IAMGold and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAMGold and NovaGold Resources, you can compare the effects of market volatilities on IAMGold 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 IAMGold with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAMGold and NovaGold Resources.
Diversification Opportunities for IAMGold and NovaGold Resources
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IAMGold and NovaGold is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding IAMGold and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and IAMGold 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 IAMGold 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 IAMGold i.e., IAMGold and NovaGold Resources go up and down completely randomly.
Pair Corralation between IAMGold and NovaGold Resources
Assuming the 90 days trading horizon IAMGold is expected to under-perform the NovaGold Resources. In addition to that, IAMGold is 1.27 times more volatile than NovaGold Resources. It trades about -0.04 of its total potential returns per unit of risk. NovaGold Resources is currently generating about -0.01 per unit of volatility. If you would invest 514.00 in NovaGold Resources on August 25, 2024 and sell it today you would lose (7.00) from holding NovaGold Resources or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAMGold vs. NovaGold Resources
Performance |
| Timeline |
| IAMGold |
| NovaGold Resources |
IAMGold and NovaGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAMGold and NovaGold Resources
The main advantage of trading using opposite IAMGold and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAMGold 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.| IAMGold vs. Eldorado Gold Corp | IAMGold vs. Kinross Gold Corp | IAMGold vs. Alamos Gold | IAMGold vs. New Gold |
| NovaGold Resources vs. Plato Gold Corp | NovaGold Resources vs. Rochester Resources | NovaGold Resources vs. Forstrong Global Income | NovaGold Resources vs. Terreno Resources Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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