Correlation Between Carlton Investments and Northern Star
Can any of the company-specific risk be diversified away by investing in both Carlton Investments 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 Carlton Investments and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlton Investments and Northern Star Resources, you can compare the effects of market volatilities on Carlton Investments 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 Carlton Investments with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlton Investments and Northern Star.
Diversification Opportunities for Carlton Investments and Northern Star
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Carlton and Northern is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments 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 Carlton Investments 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 Carlton Investments 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 Carlton Investments i.e., Carlton Investments and Northern Star go up and down completely randomly.
Pair Corralation between Carlton Investments and Northern Star
Assuming the 90 days trading horizon Carlton Investments is expected to generate 8.02 times less return on investment than Northern Star. But when comparing it to its historical volatility, Carlton Investments is 2.48 times less risky than Northern Star. It trades about 0.05 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,490 in Northern Star Resources on August 25, 2024 and sell it today you would earn a total of 300.00 from holding Northern Star Resources or generate 20.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlton Investments vs. Northern Star Resources
Performance |
| Timeline |
| Carlton Investments |
| Northern Star Resources |
Carlton Investments and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlton Investments and Northern Star
The main advantage of trading using opposite Carlton Investments and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlton Investments 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.| Carlton Investments vs. Infomedia | Carlton Investments vs. Janison Education Group | Carlton Investments vs. G8 Education | Carlton Investments vs. Autosports Group |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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