Correlation Between NovaGold Resources and Westshore Terminals
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Westshore Terminals 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 Westshore Terminals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Westshore Terminals Investment, you can compare the effects of market volatilities on NovaGold Resources and Westshore Terminals 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 Westshore Terminals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Westshore Terminals.
Diversification Opportunities for NovaGold Resources and Westshore Terminals
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between NovaGold and Westshore is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Westshore Terminals Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westshore Terminals 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 Westshore Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westshore Terminals has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Westshore Terminals go up and down completely randomly.
Pair Corralation between NovaGold Resources and Westshore Terminals
Assuming the 90 days horizon NovaGold Resources is expected to generate 3.25 times more return on investment than Westshore Terminals. However, NovaGold Resources is 3.25 times more volatile than Westshore Terminals Investment. It trades about 0.16 of its potential returns per unit of risk. Westshore Terminals Investment is currently generating about -0.01 per unit of risk. If you would invest 377.00 in NovaGold Resources on January 20, 2024 and sell it today you would earn a total of 47.00 from holding NovaGold Resources or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. Westshore Terminals Investment
Performance |
| Timeline |
| NovaGold Resources |
| Westshore Terminals |
NovaGold Resources and Westshore Terminals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Westshore Terminals
The main advantage of trading using opposite NovaGold Resources and Westshore Terminals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Westshore Terminals 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 Westshore Terminals will offset losses from the drop in Westshore Terminals' long position.The idea behind NovaGold Resources and Westshore Terminals Investment 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.| Westshore Terminals vs. Mullen Group | Westshore Terminals vs. Ritchie Bros Auctioneers | Westshore Terminals vs. Winpak | Westshore Terminals vs. North West |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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