Correlation Between NovaGold Resources and Tesla
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Tesla 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 Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Tesla Inc CDR, you can compare the effects of market volatilities on NovaGold Resources and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Tesla.
Diversification Opportunities for NovaGold Resources and Tesla
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NovaGold and Tesla is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc CDR has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Tesla go up and down completely randomly.
Pair Corralation between NovaGold Resources and Tesla
Assuming the 90 days horizon NovaGold Resources is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, NovaGold Resources is 1.11 times less risky than Tesla. The stock trades about -0.15 of its potential returns per unit of risk. The Tesla Inc CDR is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,737 in Tesla Inc CDR on November 4, 2024 and sell it today you would lose (63.00) from holding Tesla Inc CDR or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. Tesla Inc CDR
Performance |
| Timeline |
| NovaGold Resources |
| Tesla Inc CDR |
NovaGold Resources and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Tesla
The main advantage of trading using opposite NovaGold Resources and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.| NovaGold Resources vs. Centerra Gold | NovaGold Resources vs. Alamos Gold | NovaGold Resources vs. MAG Silver Corp | NovaGold Resources vs. Seabridge Gold |
| Tesla vs. Queens Road Capital | Tesla vs. CVW CleanTech | Tesla vs. Air Canada | Tesla vs. BluMetric Environmental |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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