Correlation Between NovaGold Resources and AbraSilver Resource
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and AbraSilver Resource 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 NovaGold Resources and AbraSilver Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and AbraSilver Resource Corp, you can compare the effects of market volatilities on NovaGold Resources and AbraSilver Resource 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 NovaGold Resources with a short position of AbraSilver Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and AbraSilver Resource.
Diversification Opportunities for NovaGold Resources and AbraSilver Resource
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NovaGold and AbraSilver is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and AbraSilver Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbraSilver Resource Corp and NovaGold Resources 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 NovaGold Resources are associated (or correlated) with AbraSilver Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbraSilver Resource Corp has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and AbraSilver Resource go up and down completely randomly.
Pair Corralation between NovaGold Resources and AbraSilver Resource
Assuming the 90 days horizon NovaGold Resources is expected to under-perform the AbraSilver Resource. But the stock apears to be less risky and, when comparing its historical volatility, NovaGold Resources is 1.35 times less risky than AbraSilver Resource. The stock trades about -0.02 of its potential returns per unit of risk. The AbraSilver Resource Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 148.00 in AbraSilver Resource Corp on September 1, 2024 and sell it today you would earn a total of 124.00 from holding AbraSilver Resource Corp or generate 83.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. AbraSilver Resource Corp
Performance |
| Timeline |
| NovaGold Resources |
| AbraSilver Resource Corp |
NovaGold Resources and AbraSilver Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and AbraSilver Resource
The main advantage of trading using opposite NovaGold Resources and AbraSilver Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, AbraSilver Resource 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 AbraSilver Resource will offset losses from the drop in AbraSilver Resource's long position.| NovaGold Resources vs. Centerra Gold | NovaGold Resources vs. Alamos Gold | NovaGold Resources vs. MAG Silver Corp | NovaGold Resources vs. Seabridge Gold |
| AbraSilver Resource vs. Minaurum Gold | AbraSilver Resource vs. Dolly Varden Silver | AbraSilver Resource vs. Santacruz Silv | AbraSilver Resource vs. GoGold Resources |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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