Correlation Between NovaGold Resources and Surge Battery

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

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

Diversification Opportunities for NovaGold Resources and Surge Battery

-0.5

Correlation Coefficient

NovaGold Resources  Surge Battery

Very good diversification

The 3 months correlation between NovaGold and Surge is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Surge Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Battery Metals 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 Surge Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Battery Metals has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Surge Battery go up and down completely randomly.

Pair Corralation between NovaGold Resources and Surge Battery

Assuming the 90 days horizon NovaGold Resources is expected to under-perform the Surge Battery. But the stock apears to be less risky and, when comparing its historical volatility, NovaGold Resources is 1.49 times less risky than Surge Battery. The stock trades about -0.04 of its potential returns per unit of risk. The Surge Battery Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Surge Battery Metals on September 13, 2024 and sell it today you would earn a total of  3.00  from holding Surge Battery Metals or generate 9.68% 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.  Surge Battery Metals

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 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.

Surge Battery Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Surge Battery Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Surge Battery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NovaGold Resources and Surge Battery

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

The idea behind NovaGold Resources and Surge Battery Metals 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.