Correlation Between Sherritt International and NovaGold Resources
Can any of the company-specific risk be diversified away by investing in both Sherritt International 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 Sherritt International and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sherritt International and NovaGold Resources, you can compare the effects of market volatilities on Sherritt International 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 Sherritt International with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherritt International and NovaGold Resources.
Diversification Opportunities for Sherritt International and NovaGold Resources
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sherritt and NovaGold is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sherritt International and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and Sherritt International 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 Sherritt International 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 Sherritt International i.e., Sherritt International and NovaGold Resources go up and down completely randomly.
Pair Corralation between Sherritt International and NovaGold Resources
Given the investment horizon of 90 days Sherritt International is expected to generate 1.14 times less return on investment than NovaGold Resources. In addition to that, Sherritt International is 1.21 times more volatile than NovaGold Resources. It trades about 0.12 of its total potential returns per unit of risk. NovaGold Resources is currently generating about 0.16 per unit of volatility. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sherritt International vs. NovaGold Resources
Performance |
| Timeline |
| Sherritt International |
| NovaGold Resources |
Sherritt International and NovaGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherritt International and NovaGold Resources
The main advantage of trading using opposite Sherritt International and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherritt International 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.| Sherritt International vs. Manulife Financial Corp | Sherritt International vs. Toronto Dominion Bank | Sherritt International vs. Enbridge | Sherritt International vs. Telus Corp |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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