Correlation Between Indiana Resources and Northern Star
Can any of the company-specific risk be diversified away by investing in both Indiana 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 Indiana 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 Indiana Resources and Northern Star Resources, you can compare the effects of market volatilities on Indiana 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 Indiana Resources with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indiana Resources and Northern Star.
Diversification Opportunities for Indiana Resources and Northern Star
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indiana and Northern is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Indiana 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 Indiana 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 Indiana 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 Indiana Resources i.e., Indiana Resources and Northern Star go up and down completely randomly.
Pair Corralation between Indiana Resources and Northern Star
Assuming the 90 days trading horizon Indiana Resources is expected to generate 1.31 times more return on investment than Northern Star. However, Indiana Resources is 1.31 times more volatile than Northern Star Resources. It trades about 0.09 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.12 per unit of risk. If you would invest 7.90 in Indiana Resources on August 28, 2024 and sell it today you would earn a total of 2.10 from holding Indiana Resources or generate 26.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indiana Resources vs. Northern Star Resources
Performance |
| Timeline |
| Indiana Resources |
| Northern Star Resources |
Indiana Resources and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indiana Resources and Northern Star
The main advantage of trading using opposite Indiana Resources and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indiana 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.| Indiana Resources vs. Northern Star Resources | Indiana Resources vs. Evolution Mining | Indiana Resources vs. Bluescope Steel | Indiana Resources vs. Sandfire Resources NL |
| Northern Star vs. Australian United Investment | Northern Star vs. Flagship Investments | Northern Star vs. Queste Communications | Northern Star vs. Regal Investment |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |