Correlation Between NovaGold Resources and Dividend Select

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

By analyzing existing cross correlation between NovaGold Resources and Dividend Select 15, you can compare the effects of market volatilities on NovaGold Resources and Dividend Select 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 Dividend Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Dividend Select.

Diversification Opportunities for NovaGold Resources and Dividend Select

-0.58

Correlation Coefficient

NovaGold Resources  Dividend Select

Excellent diversification

The 3 months correlation between NovaGold and Dividend is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Dividend Select 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Select 15 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 Dividend Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Select 15 has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Dividend Select go up and down completely randomly.

Pair Corralation between NovaGold Resources and Dividend Select

Assuming the 90 days horizon NovaGold Resources is expected to under-perform the Dividend Select. In addition to that, NovaGold Resources is 4.31 times more volatile than Dividend Select 15. It trades about -0.02 of its total potential returns per unit of risk. Dividend Select 15 is currently generating about 0.2 per unit of volatility. If you would invest  628.00  in Dividend Select 15 on September 3, 2024 and sell it today you would earn a total of  60.00  from holding Dividend Select 15 or generate 9.55% return on investment over 90 days.

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

NovaGold Resources  vs.  Dividend Select 15

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 very healthy basic indicators, NovaGold Resources is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Dividend Select 15

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend Select 15 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dividend Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NovaGold Resources and Dividend Select

The main advantage of trading using opposite NovaGold Resources and Dividend Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Dividend Select 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 Dividend Select will offset losses from the drop in Dividend Select's long position.

The idea behind NovaGold Resources and Dividend Select 15 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.