Correlation Between Western Investment and NovaGold Resources
Can any of the company-specific risk be diversified away by investing in both Western Investment 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 Western Investment and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and NovaGold Resources, you can compare the effects of market volatilities on Western Investment 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 Western Investment with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and NovaGold Resources.
Diversification Opportunities for Western Investment and NovaGold Resources
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and NovaGold is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and Western Investment 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 Western Investment 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 Western Investment i.e., Western Investment and NovaGold Resources go up and down completely randomly.
Pair Corralation between Western Investment and NovaGold Resources
Given the investment horizon of 90 days Western Investment is expected to generate 1.99 times more return on investment than NovaGold Resources. However, Western Investment is 1.99 times more volatile than NovaGold Resources. It trades about 0.15 of its potential returns per unit of risk. NovaGold Resources is currently generating about 0.12 per unit of risk. If you would invest 42.00 in Western Investment on September 3, 2024 and sell it today you would earn a total of 5.00 from holding Western Investment or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. NovaGold Resources
Performance |
| Timeline |
| Western Investment |
| NovaGold Resources |
Western Investment and NovaGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and NovaGold Resources
The main advantage of trading using opposite Western Investment and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment 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' long position.| Western Investment vs. Colliers International Group | Western Investment vs. Altus Group Limited | Western Investment vs. Harvest Global REIT | Western Investment vs. International Zeolite Corp |
| NovaGold Resources vs. Algoma Steel Group | NovaGold Resources vs. Champion Iron | NovaGold Resources vs. International Zeolite Corp | NovaGold Resources vs. European Residential Real |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |