Correlation Between NovaGold Resources and Tesla

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

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

Diversification Opportunities for NovaGold Resources and Tesla

0.05

Correlation Coefficient

NovaGold Resources  Tesla

Significant diversification

The 3 months correlation between NovaGold and Tesla is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc CDR has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Tesla go up and down completely randomly.

Pair Corralation between NovaGold Resources and Tesla

Assuming the 90 days horizon NovaGold Resources is expected to generate 0.66 times more return on investment than Tesla. However, NovaGold Resources is 1.52 times less risky than Tesla. It trades about -0.04 of its potential returns per unit of risk. Tesla Inc CDR is currently generating about -0.13 per unit of risk. If you would invest  469.00  in NovaGold Resources on December 30, 2024 and sell it today you would lose (47.00) from holding NovaGold Resources or give up 10.02% of portfolio value over 90 days.

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

NovaGold Resources  vs.  Tesla Inc CDR

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.

Tesla Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc CDR 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NovaGold Resources and Tesla

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

The idea behind NovaGold Resources and Tesla Inc CDR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.