Correlation Between Northern Star and OceanaGold
Can any of the company-specific risk be diversified away by investing in both Northern Star and OceanaGold 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 OceanaGold 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 OceanaGold, you can compare the effects of market volatilities on Northern Star and OceanaGold 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 OceanaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and OceanaGold.
Diversification Opportunities for Northern Star and OceanaGold
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and OceanaGold is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold 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 OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of Northern Star i.e., Northern Star and OceanaGold go up and down completely randomly.
Pair Corralation between Northern Star and OceanaGold
Assuming the 90 days horizon Northern Star Resources is expected to under-perform the OceanaGold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Northern Star Resources is 1.11 times less risky than OceanaGold. The pink sheet trades about -0.17 of its potential returns per unit of risk. The OceanaGold is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 279.00 in OceanaGold on September 5, 2024 and sell it today you would earn a total of 38.00 from holding OceanaGold or generate 13.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Northern Star Resources vs. OceanaGold
Performance |
| Timeline |
| Northern Star Resources |
| OceanaGold |
Northern Star and OceanaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and OceanaGold
The main advantage of trading using opposite Northern Star and OceanaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, OceanaGold 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 OceanaGold will offset losses from the drop in OceanaGold's long position.| Northern Star vs. Harmony Gold Mining | Northern Star vs. SPACE | Northern Star vs. T Rowe Price | Northern Star vs. Ampleforth |
| OceanaGold vs. Cache Exploration | OceanaGold vs. Evolution Mining | OceanaGold vs. Northern Star Resources | OceanaGold vs. Wesdome Gold Mines |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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