Correlation Between NOVAGOLD RESOURCES and Target
Can any of the company-specific risk be diversified away by investing in both NOVAGOLD RESOURCES and Target 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 Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOVAGOLD RESOURCES and Target, you can compare the effects of market volatilities on NOVAGOLD RESOURCES and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVAGOLD RESOURCES and Target.
Diversification Opportunities for NOVAGOLD RESOURCES and Target
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between NOVAGOLD and Target is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding NOVAGOLD RESOURCES and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of NOVAGOLD RESOURCES i.e., NOVAGOLD RESOURCES and Target go up and down completely randomly.
Pair Corralation between NOVAGOLD RESOURCES and Target
Assuming the 90 days trading horizon NOVAGOLD RESOURCES is expected to under-perform the Target. In addition to that, NOVAGOLD RESOURCES is 1.62 times more volatile than Target. It trades about -0.03 of its total potential returns per unit of risk. Target is currently generating about 0.07 per unit of volatility. If you would invest 12,947 in Target on January 25, 2024 and sell it today you would earn a total of 3,587 from holding Target or generate 27.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.57% |
Values | Daily Returns |
NOVAGOLD RESOURCES vs. Target
Performance |
Timeline |
NOVAGOLD RESOURCES |
Target |
NOVAGOLD RESOURCES and Target Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NOVAGOLD RESOURCES and Target
The main advantage of trading using opposite NOVAGOLD RESOURCES and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVAGOLD RESOURCES position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.NOVAGOLD RESOURCES vs. Alaska Air Group | NOVAGOLD RESOURCES vs. G III APPAREL GROUP | NOVAGOLD RESOURCES vs. Ryanair Holdings plc | NOVAGOLD RESOURCES vs. ALTAIR RES INC |
Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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