Correlation Between Northern Star and First Mining
Can any of the company-specific risk be diversified away by investing in both Northern Star and First Mining 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 First Mining 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 First Mining Gold, you can compare the effects of market volatilities on Northern Star and First Mining 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 First Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and First Mining.
Diversification Opportunities for Northern Star and First Mining
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Northern and First is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining Gold 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 First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of Northern Star i.e., Northern Star and First Mining go up and down completely randomly.
Pair Corralation between Northern Star and First Mining
Assuming the 90 days horizon Northern Star Resources is expected to under-perform the First Mining. But the pink sheet apears to be less risky and, when comparing its historical volatility, Northern Star Resources is 1.79 times less risky than First Mining. The pink sheet trades about -0.18 of its potential returns per unit of risk. The First Mining Gold is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 9.80 in First Mining Gold on September 3, 2024 and sell it today you would lose (0.65) from holding First Mining Gold or give up 6.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Star Resources vs. First Mining Gold
Performance |
| Timeline |
| Northern Star Resources |
| First Mining Gold |
Northern Star and First Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and First Mining
The main advantage of trading using opposite Northern Star and First Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, First Mining 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 First Mining will offset losses from the drop in First Mining's long position.| Northern Star vs. Regis Resources | Northern Star vs. West African Resources | Northern Star vs. Dundee Precious Metals | Northern Star vs. Maple Gold Mines |
| First Mining vs. Aurion Resources | First Mining vs. Orezone Gold Corp | First Mining vs. Rio2 Limited | First Mining vs. Norsemont Mining |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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