Correlation Between Northern Graphite and NextSource Materials
Can any of the company-specific risk be diversified away by investing in both Northern Graphite and NextSource Materials 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 Graphite and NextSource Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Graphite and NextSource Materials, you can compare the effects of market volatilities on Northern Graphite and NextSource Materials 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 Graphite with a short position of NextSource Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Graphite and NextSource Materials.
Diversification Opportunities for Northern Graphite and NextSource Materials
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northern and NextSource is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Northern Graphite and NextSource Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextSource Materials and Northern Graphite 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 Graphite are associated (or correlated) with NextSource Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextSource Materials has no effect on the direction of Northern Graphite i.e., Northern Graphite and NextSource Materials go up and down completely randomly.
Pair Corralation between Northern Graphite and NextSource Materials
Assuming the 90 days horizon Northern Graphite is expected to generate 1.84 times more return on investment than NextSource Materials. However, Northern Graphite is 1.84 times more volatile than NextSource Materials. It trades about -0.01 of its potential returns per unit of risk. NextSource Materials is currently generating about -0.06 per unit of risk. If you would invest 22.00 in Northern Graphite on August 29, 2024 and sell it today you would lose (13.50) from holding Northern Graphite or give up 61.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Northern Graphite vs. NextSource Materials
Performance |
| Timeline |
| Northern Graphite |
| NextSource Materials |
Northern Graphite and NextSource Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Graphite and NextSource Materials
The main advantage of trading using opposite Northern Graphite and NextSource Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Graphite position performs unexpectedly, NextSource Materials 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 NextSource Materials will offset losses from the drop in NextSource Materials' long position.| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Lomiko Metals | Northern Graphite vs. Graphite One |
| NextSource Materials vs. First Majestic Silver | NextSource Materials vs. Ivanhoe Energy | NextSource Materials vs. Orezone Gold Corp | NextSource Materials vs. Faraday Copper Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |