Correlation Between Big Ridge and Northern Superior
Can any of the company-specific risk be diversified away by investing in both Big Ridge and Northern Superior 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 Big Ridge and Northern Superior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Ridge Gold and Northern Superior Resources, you can compare the effects of market volatilities on Big Ridge and Northern Superior 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 Big Ridge with a short position of Northern Superior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Ridge and Northern Superior.
Diversification Opportunities for Big Ridge and Northern Superior
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Big and Northern is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Northern Superior Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Superior and Big Ridge 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 Big Ridge Gold are associated (or correlated) with Northern Superior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Superior has no effect on the direction of Big Ridge i.e., Big Ridge and Northern Superior go up and down completely randomly.
Pair Corralation between Big Ridge and Northern Superior
Assuming the 90 days horizon Big Ridge Gold is expected to generate 2.2 times more return on investment than Northern Superior. However, Big Ridge is 2.2 times more volatile than Northern Superior Resources. It trades about 0.05 of its potential returns per unit of risk. Northern Superior Resources is currently generating about 0.02 per unit of risk. If you would invest 6.00 in Big Ridge Gold on August 29, 2024 and sell it today you would earn a total of 0.79 from holding Big Ridge Gold or generate 13.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Big Ridge Gold vs. Northern Superior Resources
Performance |
| Timeline |
| Big Ridge Gold |
| Northern Superior |
Big Ridge and Northern Superior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Ridge and Northern Superior
The main advantage of trading using opposite Big Ridge and Northern Superior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Ridge position performs unexpectedly, Northern Superior 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 Northern Superior will offset losses from the drop in Northern Superior's long position.| Big Ridge vs. Vertiv Holdings Co | Big Ridge vs. Nasdaq Inc | Big Ridge vs. McDonalds | Big Ridge vs. Walmart |
| Northern Superior vs. Antioquia Gold | Northern Superior vs. Radisson Mining Resources | Northern Superior vs. Asante Gold | Northern Superior vs. Baru Gold Corp |
Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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