Correlation Between Falcon Energy and Northstar Clean
Can any of the company-specific risk be diversified away by investing in both Falcon Energy and Northstar Clean 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 Falcon Energy and Northstar Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Energy Materials and Northstar Clean Technologies, you can compare the effects of market volatilities on Falcon Energy and Northstar Clean 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 Falcon Energy with a short position of Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Northstar Clean.
Diversification Opportunities for Falcon Energy and Northstar Clean
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falcon and Northstar is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of Falcon Energy i.e., Falcon Energy and Northstar Clean go up and down completely randomly.
Pair Corralation between Falcon Energy and Northstar Clean
Assuming the 90 days trading horizon Falcon Energy Materials is expected to generate 1.13 times more return on investment than Northstar Clean. However, Falcon Energy is 1.13 times more volatile than Northstar Clean Technologies. It trades about 0.24 of its potential returns per unit of risk. Northstar Clean Technologies is currently generating about 0.19 per unit of risk. If you would invest 68.00 in Falcon Energy Materials on September 1, 2024 and sell it today you would earn a total of 17.00 from holding Falcon Energy Materials or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Energy Materials vs. Northstar Clean Technologies
Performance |
| Timeline |
| Falcon Energy Materials |
| Northstar Clean Tech |
Falcon Energy and Northstar Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and Northstar Clean
The main advantage of trading using opposite Falcon Energy and Northstar Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy position performs unexpectedly, Northstar Clean 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 Northstar Clean will offset losses from the drop in Northstar Clean's long position.| Falcon Energy vs. Maple Peak Investments | Falcon Energy vs. 2028 Investment Grade | Falcon Energy vs. Solid Impact Investments | Falcon Energy vs. Canaf 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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