Correlation Between NovaGold Resources and Agnico Eagle
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Agnico Eagle 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 Agnico Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Agnico Eagle Mines, you can compare the effects of market volatilities on NovaGold Resources and Agnico Eagle 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 Agnico Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Agnico Eagle.
Diversification Opportunities for NovaGold Resources and Agnico Eagle
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NovaGold and Agnico is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Agnico Eagle Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agnico Eagle Mines 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 Agnico Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agnico Eagle Mines has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Agnico Eagle go up and down completely randomly.
Pair Corralation between NovaGold Resources and Agnico Eagle
Allowing for the 90-day total investment horizon NovaGold Resources is expected to under-perform the Agnico Eagle. In addition to that, NovaGold Resources is 1.92 times more volatile than Agnico Eagle Mines. It trades about -0.02 of its total potential returns per unit of risk. Agnico Eagle Mines is currently generating about 0.12 per unit of volatility. If you would invest 4,861 in Agnico Eagle Mines on January 19, 2024 and sell it today you would earn a total of 1,486 from holding Agnico Eagle Mines or generate 30.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
NovaGold Resources vs. Agnico Eagle Mines
Performance |
| Timeline |
| NovaGold Resources |
| Agnico Eagle Mines |
NovaGold Resources and Agnico Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Agnico Eagle
The main advantage of trading using opposite NovaGold Resources and Agnico Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Agnico Eagle 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 Agnico Eagle will offset losses from the drop in Agnico Eagle's long position.| NovaGold Resources vs. Paramount Gold Nevada | NovaGold Resources vs. Liberty Gold Corp | NovaGold Resources vs. International Tower Hill | NovaGold Resources vs. Allegiant Gold |
| Agnico Eagle vs. Paramount Gold Nevada | Agnico Eagle vs. Liberty Gold Corp | Agnico Eagle vs. International Tower Hill | Agnico Eagle vs. Allegiant Gold |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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