Correlation Between Clime Investment and Northern Star
Can any of the company-specific risk be diversified away by investing in both Clime Investment 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 Clime Investment and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clime Investment Management and Northern Star Resources, you can compare the effects of market volatilities on Clime Investment 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 Clime Investment with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Northern Star.
Diversification Opportunities for Clime Investment and Northern Star
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clime and Northern is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management 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 Clime Investment 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 Clime Investment Management 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 Clime Investment i.e., Clime Investment and Northern Star go up and down completely randomly.
Pair Corralation between Clime Investment and Northern Star
Assuming the 90 days trading horizon Clime Investment is expected to generate 1.18 times less return on investment than Northern Star. But when comparing it to its historical volatility, Clime Investment Management is 1.01 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 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,454 in Northern Star Resources on September 4, 2024 and sell it today you would earn a total of 159.00 from holding Northern Star Resources or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clime Investment Management vs. Northern Star Resources
Performance |
| Timeline |
| Clime Investment Man |
| Northern Star Resources |
Clime Investment and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clime Investment and Northern Star
The main advantage of trading using opposite Clime Investment and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clime Investment 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.| Clime Investment vs. Westpac Banking | Clime Investment vs. Ecofibre | Clime Investment vs. Adriatic Metals Plc | Clime Investment vs. Australian Dairy Farms |
| Northern Star vs. Pinnacle Investment Management | Northern Star vs. Clime Investment Management | Northern Star vs. Diversified United Investment | Northern Star vs. Platinum Asset Management |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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