Correlation Between NovaGold Resources and TransAtlantic Petroleum
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and TransAtlantic Petroleum 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 TransAtlantic Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and TransAtlantic Petroleum, you can compare the effects of market volatilities on NovaGold Resources and TransAtlantic Petroleum 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 TransAtlantic Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and TransAtlantic Petroleum.
Diversification Opportunities for NovaGold Resources and TransAtlantic Petroleum
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NovaGold and TransAtlantic is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and TransAtlantic Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAtlantic Petroleum 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 TransAtlantic Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAtlantic Petroleum has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and TransAtlantic Petroleum go up and down completely randomly.
Pair Corralation between NovaGold Resources and TransAtlantic Petroleum
Assuming the 90 days horizon NovaGold Resources is expected to under-perform the TransAtlantic Petroleum. In addition to that, NovaGold Resources is 1.48 times more volatile than TransAtlantic Petroleum. It trades about -0.02 of its total potential returns per unit of risk. TransAtlantic Petroleum is currently generating about 0.09 per unit of volatility. If you would invest 1,720 in TransAtlantic Petroleum on August 24, 2024 and sell it today you would earn a total of 1,208 from holding TransAtlantic Petroleum or generate 70.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 75.6% |
| Values | Daily Returns |
NovaGold Resources vs. TransAtlantic Petroleum
Performance |
| Timeline |
| NovaGold Resources |
| TransAtlantic Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NovaGold Resources and TransAtlantic Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and TransAtlantic Petroleum
The main advantage of trading using opposite NovaGold Resources and TransAtlantic Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, TransAtlantic Petroleum 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 TransAtlantic Petroleum will offset losses from the drop in TransAtlantic Petroleum's long position.| NovaGold Resources vs. Rainy Mountain Royalty | NovaGold Resources vs. Plato Gold Corp | NovaGold Resources vs. Rochester Resources | NovaGold Resources vs. Forstrong Global Income |
| TransAtlantic Petroleum vs. Teekay | TransAtlantic Petroleum vs. Teekay Tankers | TransAtlantic Petroleum vs. DHT Holdings | TransAtlantic Petroleum vs. Frontline |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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