Correlation Between NovaGold Resources and Universal Stainless
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Universal Stainless 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 Universal Stainless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Universal Stainless Alloy, you can compare the effects of market volatilities on NovaGold Resources and Universal Stainless 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 Universal Stainless. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Universal Stainless.
Diversification Opportunities for NovaGold Resources and Universal Stainless
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NovaGold and Universal is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy 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 Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Universal Stainless go up and down completely randomly.
Pair Corralation between NovaGold Resources and Universal Stainless
Allowing for the 90-day total investment horizon NovaGold Resources is expected to under-perform the Universal Stainless. In addition to that, NovaGold Resources is 7.29 times more volatile than Universal Stainless Alloy. It trades about -0.02 of its total potential returns per unit of risk. Universal Stainless Alloy is currently generating about 0.19 per unit of volatility. If you would invest 4,364 in Universal Stainless Alloy on August 28, 2024 and sell it today you would earn a total of 70.00 from holding Universal Stainless Alloy or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. Universal Stainless Alloy
Performance |
| Timeline |
| NovaGold Resources |
| Universal Stainless Alloy |
NovaGold Resources and Universal Stainless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Universal Stainless
The main advantage of trading using opposite NovaGold Resources and Universal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Universal Stainless 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 Universal Stainless will offset losses from the drop in Universal Stainless' long position.The idea behind NovaGold Resources and Universal Stainless Alloy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Universal Stainless vs. Olympic Steel | Universal Stainless vs. Outokumpu Oyj ADR | Universal Stainless vs. Usinas Siderurgicas de | Universal Stainless vs. POSCO Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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