Correlation Between NovaGold Resources and AGF Management

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

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

Diversification Opportunities for NovaGold Resources and AGF Management

-0.37

Correlation Coefficient

NovaGold Resources  AGF Management

Very good diversification

The 3 months correlation between NovaGold and AGF is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management 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 AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and AGF Management go up and down completely randomly.

Pair Corralation between NovaGold Resources and AGF Management

Assuming the 90 days horizon NovaGold Resources is expected to under-perform the AGF Management. In addition to that, NovaGold Resources is 1.92 times more volatile than AGF Management Limited. It trades about -0.06 of its total potential returns per unit of risk. AGF Management Limited is currently generating about 0.09 per unit of volatility. If you would invest  1,102  in AGF Management Limited on December 1, 2024 and sell it today you would earn a total of  89.00  from holding AGF Management Limited or generate 8.08% 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.  AGF Management Limited

NovaGold Resources

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

AGF Management

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, AGF Management may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NovaGold Resources and AGF Management

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

The idea behind NovaGold Resources and AGF Management Limited 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.