Correlation Between NovaGold Resources and Celestica
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Celestica 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 Celestica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Celestica, you can compare the effects of market volatilities on NovaGold Resources and Celestica 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 Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Celestica.
Diversification Opportunities for NovaGold Resources and Celestica
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NovaGold and Celestica is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Celestica go up and down completely randomly.
Pair Corralation between NovaGold Resources and Celestica
Assuming the 90 days horizon NovaGold Resources is expected to under-perform the Celestica. But the stock apears to be less risky and, when comparing its historical volatility, NovaGold Resources is 1.2 times less risky than Celestica. The stock trades about -0.04 of its potential returns per unit of risk. The Celestica is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 9,736 in Celestica on August 30, 2024 and sell it today you would earn a total of 1,934 from holding Celestica or generate 19.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. Celestica
Performance |
| Timeline |
| NovaGold Resources |
| Celestica |
NovaGold Resources and Celestica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Celestica
The main advantage of trading using opposite NovaGold Resources and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.| NovaGold Resources vs. Centerra Gold | NovaGold Resources vs. Alamos Gold | NovaGold Resources vs. MAG Silver Corp | NovaGold Resources vs. Seabridge Gold |
| Celestica vs. Descartes Systems Group | Celestica vs. CAE Inc | Celestica vs. CGI Inc | Celestica vs. Cogeco Communications |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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