Correlation Between Eagle Mountain and Northern Star
Can any of the company-specific risk be diversified away by investing in both Eagle Mountain 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 Eagle Mountain and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Mountain Mining and Northern Star Resources, you can compare the effects of market volatilities on Eagle Mountain 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 Eagle Mountain with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Mountain and Northern Star.
Diversification Opportunities for Eagle Mountain and Northern Star
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eagle and Northern is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Mountain 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 Eagle Mountain 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 Eagle Mountain 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 Eagle Mountain i.e., Eagle Mountain and Northern Star go up and down completely randomly.
Pair Corralation between Eagle Mountain and Northern Star
Assuming the 90 days trading horizon Eagle Mountain Mining is expected to under-perform the Northern Star. In addition to that, Eagle Mountain is 4.94 times more volatile than Northern Star Resources. It trades about -0.03 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.18 per unit of volatility. If you would invest 1,745 in Northern Star Resources on November 18, 2024 and sell it today you would earn a total of 111.00 from holding Northern Star Resources or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Mountain Mining vs. Northern Star Resources
Performance |
| Timeline |
| Eagle Mountain Mining |
| Northern Star Resources |
Eagle Mountain and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Mountain and Northern Star
The main advantage of trading using opposite Eagle Mountain and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Mountain 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.| Eagle Mountain vs. 29Metals | Eagle Mountain vs. Hansen Technologies | Eagle Mountain vs. Energy Technologies Limited | Eagle Mountain vs. Zoom2u Technologies |
| Northern Star vs. Super Retail Group | Northern Star vs. Mirrabooka Investments | Northern Star vs. Retail Food Group | Northern Star vs. Flagship Investments |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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