Correlation Between Graphite One and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both Graphite One and Northern Graphite 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 Graphite One and Northern Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graphite One and Northern Graphite, you can compare the effects of market volatilities on Graphite One and Northern Graphite 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 Graphite One with a short position of Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphite One and Northern Graphite.
Diversification Opportunities for Graphite One and Northern Graphite
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Graphite and Northern is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Graphite One and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite and Graphite One 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 Graphite One are associated (or correlated) with Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of Graphite One i.e., Graphite One and Northern Graphite go up and down completely randomly.
Pair Corralation between Graphite One and Northern Graphite
Assuming the 90 days horizon Graphite One is expected to generate 8.98 times less return on investment than Northern Graphite. But when comparing it to its historical volatility, Graphite One is 2.75 times less risky than Northern Graphite. It trades about 0.04 of its potential returns per unit of risk. Northern Graphite is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Northern Graphite on November 1, 2024 and sell it today you would earn a total of 3.95 from holding Northern Graphite or generate 65.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graphite One vs. Northern Graphite
Performance |
| Timeline |
| Graphite One |
| Northern Graphite |
Graphite One and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphite One and Northern Graphite
The main advantage of trading using opposite Graphite One and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphite One position performs unexpectedly, Northern Graphite 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 Graphite will offset losses from the drop in Northern Graphite's long position.| Graphite One vs. Mason Graphite | Graphite One vs. Northern Graphite | Graphite One vs. Lomiko Metals | Graphite One vs. IGO Limited |
| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Graphite One | Northern Graphite vs. Syrah Resources Limited |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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