Correlation Between M3 Mining and Northern Star
Can any of the company-specific risk be diversified away by investing in both M3 Mining 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 M3 Mining and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Mining and Northern Star Resources, you can compare the effects of market volatilities on M3 Mining 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 M3 Mining with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and Northern Star.
Diversification Opportunities for M3 Mining and Northern Star
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between M3M and Northern is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining 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 M3 Mining 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 M3 Mining 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 M3 Mining i.e., M3 Mining and Northern Star go up and down completely randomly.
Pair Corralation between M3 Mining and Northern Star
Assuming the 90 days trading horizon M3 Mining is expected to under-perform the Northern Star. In addition to that, M3 Mining is 1.38 times more volatile than Northern Star Resources. It trades about -0.21 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.06 per unit of volatility. If you would invest 1,741 in Northern Star Resources on August 25, 2024 and sell it today you would earn a total of 49.00 from holding Northern Star Resources or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
M3 Mining vs. Northern Star Resources
Performance |
| Timeline |
| M3 Mining |
| Northern Star Resources |
M3 Mining and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 Mining and Northern Star
The main advantage of trading using opposite M3 Mining and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining 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.| M3 Mining vs. Northern Star Resources | M3 Mining vs. Evolution Mining | M3 Mining vs. Aneka Tambang Tbk | M3 Mining vs. De Grey Mining |
| Northern Star vs. RLF AgTech | Northern Star vs. Thorney Technologies | Northern Star vs. Zoom2u Technologies | Northern Star vs. Richmond Vanadium Technology |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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