Correlation Between Centerra Gold and Northern Star
Can any of the company-specific risk be diversified away by investing in both Centerra Gold 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 Centerra Gold and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centerra Gold and Northern Star Resources, you can compare the effects of market volatilities on Centerra Gold 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 Centerra Gold with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centerra Gold and Northern Star.
Diversification Opportunities for Centerra Gold and Northern Star
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centerra and Northern is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold 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 Centerra Gold 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 Centerra Gold 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 Centerra Gold i.e., Centerra Gold and Northern Star go up and down completely randomly.
Pair Corralation between Centerra Gold and Northern Star
Given the investment horizon of 90 days Centerra Gold is expected to under-perform the Northern Star. But the stock apears to be less risky and, when comparing its historical volatility, Centerra Gold is 1.76 times less risky than Northern Star. The stock trades about -0.16 of its potential returns per unit of risk. The Northern Star Resources is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,150 in Northern Star Resources on October 20, 2024 and sell it today you would lose (125.00) from holding Northern Star Resources or give up 10.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centerra Gold vs. Northern Star Resources
Performance |
| Timeline |
| Centerra Gold |
| Northern Star Resources |
Centerra Gold and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centerra Gold and Northern Star
The main advantage of trading using opposite Centerra Gold and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerra Gold 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.| Centerra Gold vs. Gold Fields Ltd | Centerra Gold vs. Eldorado Gold Corp | Centerra Gold vs. Osisko Gold Ro | Centerra Gold vs. SSR Mining |
| Northern Star vs. Regis Resources | Northern Star vs. West African Resources | Northern Star vs. Dundee Precious Metals | Northern Star vs. Maple Gold Mines |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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