Correlation Between NovaGold Resources and Western Copper
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Western Copper 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 Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Western Copper and, you can compare the effects of market volatilities on NovaGold Resources and Western Copper 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 Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Western Copper.
Diversification Opportunities for NovaGold Resources and Western Copper
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NovaGold and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Western Copper go up and down completely randomly.
Pair Corralation between NovaGold Resources and Western Copper
Assuming the 90 days horizon NovaGold Resources is expected to generate 1.16 times more return on investment than Western Copper. However, NovaGold Resources is 1.16 times more volatile than Western Copper and. It trades about 0.01 of its potential returns per unit of risk. Western Copper and is currently generating about 0.0 per unit of risk. If you would invest 547.00 in NovaGold Resources on September 2, 2024 and sell it today you would lose (32.00) from holding NovaGold Resources or give up 5.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. Western Copper and
Performance |
| Timeline |
| NovaGold Resources |
| Western Copper |
NovaGold Resources and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Western Copper
The main advantage of trading using opposite NovaGold Resources and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.| NovaGold Resources vs. Centerra Gold | NovaGold Resources vs. Alamos Gold | NovaGold Resources vs. MAG Silver Corp | NovaGold Resources vs. Seabridge Gold |
| Western Copper vs. Kiplin Metals | Western Copper vs. Noram Lithium Corp | Western Copper vs. Minnova 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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