Correlation Between Labrador Iron and Northstar Clean
Can any of the company-specific risk be diversified away by investing in both Labrador Iron 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 Labrador Iron and Northstar Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Iron Ore and Northstar Clean Technologies, you can compare the effects of market volatilities on Labrador Iron 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 Labrador Iron with a short position of Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and Northstar Clean.
Diversification Opportunities for Labrador Iron and Northstar Clean
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Labrador and Northstar is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore 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 Labrador Iron 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 Labrador Iron Ore 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 Labrador Iron i.e., Labrador Iron and Northstar Clean go up and down completely randomly.
Pair Corralation between Labrador Iron and Northstar Clean
Assuming the 90 days trading horizon Labrador Iron Ore is expected to under-perform the Northstar Clean. But the stock apears to be less risky and, when comparing its historical volatility, Labrador Iron Ore is 3.25 times less risky than Northstar Clean. The stock trades about -0.09 of its potential returns per unit of risk. The Northstar Clean Technologies is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Northstar Clean Technologies on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Northstar Clean Technologies or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Iron Ore vs. Northstar Clean Technologies
Performance |
| Timeline |
| Labrador Iron Ore |
| Northstar Clean Tech |
Labrador Iron and Northstar Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Iron and Northstar Clean
The main advantage of trading using opposite Labrador Iron and Northstar Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron 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.| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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