Correlation Between BSP Financial and Northern Star
Can any of the company-specific risk be diversified away by investing in both BSP Financial and Northern Star 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 BSP Financial and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BSP Financial Group and Northern Star Resources, you can compare the effects of market volatilities on BSP Financial and Northern Star 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 BSP Financial with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSP Financial and Northern Star.
Diversification Opportunities for BSP Financial and Northern Star
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BSP and Northern is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources and BSP Financial 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 BSP Financial Group are associated (or correlated) with Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of BSP Financial i.e., BSP Financial and Northern Star go up and down completely randomly.
Pair Corralation between BSP Financial and Northern Star
Assuming the 90 days trading horizon BSP Financial is expected to generate 1.11 times less return on investment than Northern Star. But when comparing it to its historical volatility, BSP Financial Group is 1.13 times less risky than Northern Star. It trades about 0.07 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,038 in Northern Star Resources on August 25, 2024 and sell it today you would earn a total of 752.00 from holding Northern Star Resources or generate 72.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BSP Financial Group vs. Northern Star Resources
Performance |
| Timeline |
| BSP Financial Group |
| Northern Star Resources |
BSP Financial and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BSP Financial and Northern Star
The main advantage of trading using opposite BSP Financial and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSP Financial position performs unexpectedly, Northern Star 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 Star will offset losses from the drop in Northern Star's long position.| BSP Financial vs. Energy Resources | BSP Financial vs. 88 Energy | BSP Financial vs. Amani Gold | BSP Financial vs. A1 Investments Resources |
| Northern Star vs. Carlton Investments | Northern Star vs. Hutchison Telecommunications | Northern Star vs. BSP Financial Group | Northern Star vs. Air New Zealand |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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