Correlation Between Andrew Peller and NovaGold Resources

Can any of the company-specific risk be diversified away by investing in both Andrew Peller 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 Andrew Peller and NovaGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Andrew Peller Limited and NovaGold Resources, you can compare the effects of market volatilities on Andrew Peller 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 Andrew Peller with a short position of NovaGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andrew Peller and NovaGold Resources.

Diversification Opportunities for Andrew Peller and NovaGold Resources

-0.19

Correlation Coefficient

Andrew Peller  NovaGold Resources

Good diversification

The 3 months correlation between Andrew and NovaGold is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Andrew Peller Limited and NovaGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaGold Resources and Andrew Peller 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 Andrew Peller Limited 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 Andrew Peller i.e., Andrew Peller and NovaGold Resources go up and down completely randomly.

Pair Corralation between Andrew Peller and NovaGold Resources

Assuming the 90 days trading horizon Andrew Peller Limited is expected to generate 0.41 times more return on investment than NovaGold Resources. However, Andrew Peller Limited is 2.44 times less risky than NovaGold Resources. It trades about 0.0 of its potential returns per unit of risk. NovaGold Resources is currently generating about -0.09 per unit of risk. If you would invest  404.00  in Andrew Peller Limited on September 24, 2024 and sell it today you would lose (1.00) from holding Andrew Peller Limited or give up 0.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Andrew Peller Limited  vs.  NovaGold Resources

Andrew Peller Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andrew Peller Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Andrew Peller is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

NovaGold Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NovaGold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Andrew Peller and NovaGold Resources

The main advantage of trading using opposite Andrew Peller and NovaGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andrew Peller 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.

The idea behind Andrew Peller Limited and NovaGold Resources 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.