Correlation Between NovaGold Resources and Barnes

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Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Barnes 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 Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Barnes Group, you can compare the effects of market volatilities on NovaGold Resources and Barnes 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 Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Barnes.

Diversification Opportunities for NovaGold Resources and Barnes

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between NovaGold and Barnes is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group 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 Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Barnes go up and down completely randomly.

Pair Corralation between NovaGold Resources and Barnes

Allowing for the 90-day total investment horizon NovaGold Resources is expected to generate 2.21 times more return on investment than Barnes. However, NovaGold Resources is 2.21 times more volatile than Barnes Group. It trades about 0.2 of its potential returns per unit of risk. Barnes Group is currently generating about 0.15 per unit of risk. If you would invest  237.00  in NovaGold Resources on December 29, 2023 and sell it today you would earn a total of  39.00  from holding NovaGold Resources or generate 16.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

NovaGold Resources  vs.  Barnes Group

 Performance 
       Timeline  
NovaGold Resources 

Risk-Adjusted Performance

0 of 100

 
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High
Very Weak
Over the last 90 days NovaGold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Barnes Group 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Barnes sustained solid returns over the last few months and may actually be approaching a breakup point.

NovaGold Resources and Barnes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NovaGold Resources and Barnes

The main advantage of trading using opposite NovaGold Resources and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Barnes 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 Barnes will offset losses from the drop in Barnes' long position.
The idea behind NovaGold Resources and Barnes Group 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.
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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