Correlation Between Firetail Resources and Northern Star
Can any of the company-specific risk be diversified away by investing in both Firetail Resources 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 Firetail Resources and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firetail Resources and Northern Star Resources, you can compare the effects of market volatilities on Firetail Resources 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 Firetail Resources with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firetail Resources and Northern Star.
Diversification Opportunities for Firetail Resources and Northern Star
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Firetail and Northern is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Firetail Resources 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 Firetail Resources 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 Firetail Resources 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 Firetail Resources i.e., Firetail Resources and Northern Star go up and down completely randomly.
Pair Corralation between Firetail Resources and Northern Star
Assuming the 90 days trading horizon Firetail Resources is expected to generate 5.09 times more return on investment than Northern Star. However, Firetail Resources is 5.09 times more volatile than Northern Star Resources. It trades about 0.03 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.06 per unit of risk. If you would invest 15.00 in Firetail Resources on September 3, 2024 and sell it today you would lose (7.00) from holding Firetail Resources or give up 46.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firetail Resources vs. Northern Star Resources
Performance |
| Timeline |
| Firetail Resources |
| Northern Star Resources |
Firetail Resources and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firetail Resources and Northern Star
The main advantage of trading using opposite Firetail Resources and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firetail Resources 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.| Firetail Resources vs. MFF Capital Investments | Firetail Resources vs. Bio Gene Technology | Firetail Resources vs. Hutchison Telecommunications | Firetail Resources vs. Australian United Investment |
| Northern Star vs. MetalsGrove Mining | Northern Star vs. Lendlease Group | Northern Star vs. Dicker Data | Northern Star vs. DY6 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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