Correlation Between Black Rock and Northern Star
Can any of the company-specific risk be diversified away by investing in both Black Rock 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 Black Rock and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Rock Mining and Northern Star Resources, you can compare the effects of market volatilities on Black Rock 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 Black Rock with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Northern Star.
Diversification Opportunities for Black Rock and Northern Star
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Black and Northern is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining 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 Black Rock 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 Black Rock Mining 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 Black Rock i.e., Black Rock and Northern Star go up and down completely randomly.
Pair Corralation between Black Rock and Northern Star
Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Northern Star. In addition to that, Black Rock is 1.95 times more volatile than Northern Star Resources. It trades about -0.06 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.09 per unit of volatility. If you would invest 1,233 in Northern Star Resources on August 25, 2024 and sell it today you would earn a total of 557.00 from holding Northern Star Resources or generate 45.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Rock Mining vs. Northern Star Resources
Performance |
| Timeline |
| Black Rock Mining |
| Northern Star Resources |
Black Rock and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Rock and Northern Star
The main advantage of trading using opposite Black Rock and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock 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.| Black Rock vs. Northern Star Resources | Black Rock vs. Evolution Mining | Black Rock vs. Bluescope Steel | Black Rock vs. Sandfire Resources NL |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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