Correlation Between NOVAGOLD RESOURCES and Amazon
Can any of the company-specific risk be diversified away by investing in both NOVAGOLD RESOURCES and Amazon 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 Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOVAGOLD RESOURCES and Amazon Inc, you can compare the effects of market volatilities on NOVAGOLD RESOURCES and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVAGOLD RESOURCES and Amazon.
Diversification Opportunities for NOVAGOLD RESOURCES and Amazon
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NOVAGOLD and Amazon is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NOVAGOLD RESOURCES and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of NOVAGOLD RESOURCES i.e., NOVAGOLD RESOURCES and Amazon go up and down completely randomly.
Pair Corralation between NOVAGOLD RESOURCES and Amazon
Assuming the 90 days trading horizon NOVAGOLD RESOURCES is expected to generate 4.8 times more return on investment than Amazon. However, NOVAGOLD RESOURCES is 4.8 times more volatile than Amazon Inc. It trades about 0.23 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.27 per unit of risk. If you would invest 238.00 in NOVAGOLD RESOURCES on January 19, 2024 and sell it today you would earn a total of 52.00 from holding NOVAGOLD RESOURCES or generate 21.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOVAGOLD RESOURCES vs. Amazon Inc
Performance |
| Timeline |
| NOVAGOLD RESOURCES |
| Amazon Inc |
NOVAGOLD RESOURCES and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOVAGOLD RESOURCES and Amazon
The main advantage of trading using opposite NOVAGOLD RESOURCES and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVAGOLD RESOURCES position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| NOVAGOLD RESOURCES vs. SMA Solar Technology | NOVAGOLD RESOURCES vs. AECOM TECHNOLOGY | NOVAGOLD RESOURCES vs. Amkor Technology | NOVAGOLD RESOURCES vs. KENEDIX OFFICE INV |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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