Correlation Between Northern Star and Drdgold
Can any of the company-specific risk be diversified away by investing in both Northern Star and Drdgold 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 Northern Star and Drdgold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Star Resources and Drdgold, you can compare the effects of market volatilities on Northern Star and Drdgold 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 Northern Star with a short position of Drdgold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Drdgold.
Diversification Opportunities for Northern Star and Drdgold
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and Drdgold is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Drdgold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drdgold and Northern Star 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 Northern Star Resources are associated (or correlated) with Drdgold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drdgold has no effect on the direction of Northern Star i.e., Northern Star and Drdgold go up and down completely randomly.
Pair Corralation between Northern Star and Drdgold
Assuming the 90 days horizon Northern Star is expected to generate 1.55 times less return on investment than Drdgold. In addition to that, Northern Star is 1.62 times more volatile than Drdgold. It trades about 0.06 of its total potential returns per unit of risk. Drdgold is currently generating about 0.16 per unit of volatility. If you would invest 79.00 in Drdgold on September 2, 2024 and sell it today you would earn a total of 17.00 from holding Drdgold or generate 21.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 55.56% |
| Values | Daily Returns |
Northern Star Resources vs. Drdgold
Performance |
| Timeline |
| Northern Star Resources |
| Drdgold |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
Northern Star and Drdgold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Drdgold
The main advantage of trading using opposite Northern Star and Drdgold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Drdgold 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 Drdgold will offset losses from the drop in Drdgold's long position.| Northern Star vs. Aurion Resources | Northern Star vs. Rio2 Limited | Northern Star vs. Palamina Corp | Northern Star vs. Grande Portage Resources |
| Drdgold vs. Alkane Resources Limited | Drdgold vs. Evolution Mining | Drdgold vs. Dundee Precious Metals | Drdgold vs. Northern Star Resources |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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