Correlation Between Capricorn Metals and Northern Star
Can any of the company-specific risk be diversified away by investing in both Capricorn Metals 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 Capricorn Metals and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capricorn Metals and Northern Star Resources, you can compare the effects of market volatilities on Capricorn Metals 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 Capricorn Metals with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capricorn Metals and Northern Star.
Diversification Opportunities for Capricorn Metals and Northern Star
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capricorn and Northern is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Capricorn Metals 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 Capricorn Metals 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 Capricorn Metals 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 Capricorn Metals i.e., Capricorn Metals and Northern Star go up and down completely randomly.
Pair Corralation between Capricorn Metals and Northern Star
Assuming the 90 days trading horizon Capricorn Metals is expected to generate 1.24 times more return on investment than Northern Star. However, Capricorn Metals is 1.24 times more volatile than Northern Star Resources. It trades about 0.06 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.07 per unit of risk. If you would invest 474.00 in Capricorn Metals on September 12, 2024 and sell it today you would earn a total of 219.00 from holding Capricorn Metals or generate 46.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capricorn Metals vs. Northern Star Resources
Performance |
| Timeline |
| Capricorn Metals |
| Northern Star Resources |
Capricorn Metals and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capricorn Metals and Northern Star
The main advantage of trading using opposite Capricorn Metals and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capricorn Metals 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.| Capricorn Metals vs. Clime Investment Management | Capricorn Metals vs. Computershare | Capricorn Metals vs. MFF Capital Investments | Capricorn Metals vs. Home Consortium |
| Northern Star vs. Pinnacle Investment Management | Northern Star vs. Diversified United Investment | Northern Star vs. Data3 | Northern Star vs. Stelar Metals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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