Correlation Between Nordic Iron and Arctic Gold
Can any of the company-specific risk be diversified away by investing in both Nordic Iron and Arctic Gold 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 Nordic Iron and Arctic Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Iron Ore and Arctic Gold Publ, you can compare the effects of market volatilities on Nordic Iron and Arctic Gold 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 Nordic Iron with a short position of Arctic Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Iron and Arctic Gold.
Diversification Opportunities for Nordic Iron and Arctic Gold
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nordic and Arctic is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Iron Ore and Arctic Gold Publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Gold Publ and Nordic Iron 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 Nordic Iron Ore are associated (or correlated) with Arctic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Gold Publ has no effect on the direction of Nordic Iron i.e., Nordic Iron and Arctic Gold go up and down completely randomly.
Pair Corralation between Nordic Iron and Arctic Gold
Assuming the 90 days trading horizon Nordic Iron Ore is expected to under-perform the Arctic Gold. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Iron Ore is 2.49 times less risky than Arctic Gold. The stock trades about -0.11 of its potential returns per unit of risk. The Arctic Gold Publ is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Arctic Gold Publ on September 13, 2024 and sell it today you would lose (2.00) from holding Arctic Gold Publ or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Iron Ore vs. Arctic Gold Publ
Performance |
| Timeline |
| Nordic Iron Ore |
| Arctic Gold Publ |
Nordic Iron and Arctic Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Iron and Arctic Gold
The main advantage of trading using opposite Nordic Iron and Arctic Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Iron position performs unexpectedly, Arctic Gold 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 Arctic Gold will offset losses from the drop in Arctic Gold's long position.| Nordic Iron vs. Leading Edge Materials | Nordic Iron vs. Alzinova AB | Nordic Iron vs. SaltX Technology Holding |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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