Correlation Between Silicon Motion and NOVAGOLD RESOURCES
Can any of the company-specific risk be diversified away by investing in both Silicon Motion and NOVAGOLD RESOURCES 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 Silicon Motion and NOVAGOLD RESOURCES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Motion Technology and NOVAGOLD RESOURCES, you can compare the effects of market volatilities on Silicon Motion and NOVAGOLD RESOURCES 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 Silicon Motion with a short position of NOVAGOLD RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and NOVAGOLD RESOURCES.
Diversification Opportunities for Silicon Motion and NOVAGOLD RESOURCES
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Silicon and NOVAGOLD is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and NOVAGOLD RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVAGOLD RESOURCES and Silicon Motion 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 Silicon Motion Technology are associated (or correlated) with NOVAGOLD RESOURCES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVAGOLD RESOURCES has no effect on the direction of Silicon Motion i.e., Silicon Motion and NOVAGOLD RESOURCES go up and down completely randomly.
Pair Corralation between Silicon Motion and NOVAGOLD RESOURCES
Assuming the 90 days trading horizon Silicon Motion Technology is expected to generate 1.22 times more return on investment than NOVAGOLD RESOURCES. However, Silicon Motion is 1.22 times more volatile than NOVAGOLD RESOURCES. It trades about -0.02 of its potential returns per unit of risk. NOVAGOLD RESOURCES is currently generating about -0.16 per unit of risk. If you would invest 5,350 in Silicon Motion Technology on October 13, 2024 and sell it today you would lose (100.00) from holding Silicon Motion Technology or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Silicon Motion Technology vs. NOVAGOLD RESOURCES
Performance |
| Timeline |
| Silicon Motion Technology |
| NOVAGOLD RESOURCES |
Silicon Motion and NOVAGOLD RESOURCES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and NOVAGOLD RESOURCES
The main advantage of trading using opposite Silicon Motion and NOVAGOLD RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion position performs unexpectedly, NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES will offset losses from the drop in NOVAGOLD RESOURCES's long position.| Silicon Motion vs. NorAm Drilling AS | Silicon Motion vs. Penta Ocean Construction Co | Silicon Motion vs. BOSTON BEER A | Silicon Motion vs. North American Construction |
| NOVAGOLD RESOURCES vs. Pembina Pipeline Corp | NOVAGOLD RESOURCES vs. CLEAN ENERGY FUELS | NOVAGOLD RESOURCES vs. CVW CLEANTECH INC | NOVAGOLD RESOURCES vs. Delta Electronics Public |
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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