Correlation Between NovaGold Resources and E L

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

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

Diversification Opportunities for NovaGold Resources and E L

-0.43

Correlation Coefficient

NovaGold Resources  E L

Very good diversification

The 3 months correlation between NovaGold and ELF is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and E L Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E L Financial 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 E L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E L Financial has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and E L go up and down completely randomly.

Pair Corralation between NovaGold Resources and E L

Assuming the 90 days horizon NovaGold Resources is expected to generate 2.24 times more return on investment than E L. However, NovaGold Resources is 2.24 times more volatile than E L Financial Corp. It trades about 0.0 of its potential returns per unit of risk. E L Financial Corp is currently generating about -0.24 per unit of risk. If you would invest  494.00  in NovaGold Resources on September 17, 2024 and sell it today you would lose (6.00) from holding NovaGold Resources or give up 1.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

NovaGold Resources  vs.  E L Financial Corp

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.

E L Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, E L may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NovaGold Resources and E L

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

The idea behind NovaGold Resources and E L Financial Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.