Correlation Between Northern Star and ARN Media
Can any of the company-specific risk be diversified away by investing in both Northern Star and ARN Media 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 ARN Media 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 ARN Media Limited, you can compare the effects of market volatilities on Northern Star and ARN Media 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 ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and ARN Media.
Diversification Opportunities for Northern Star and ARN Media
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and ARN is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited 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 ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Northern Star i.e., Northern Star and ARN Media go up and down completely randomly.
Pair Corralation between Northern Star and ARN Media
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.69 times more return on investment than ARN Media. However, Northern Star Resources is 1.46 times less risky than ARN Media. It trades about 0.09 of its potential returns per unit of risk. ARN Media Limited is currently generating about -0.02 per unit of risk. If you would invest 1,430 in Northern Star Resources on September 3, 2024 and sell it today you would earn a total of 321.00 from holding Northern Star Resources or generate 22.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Star Resources vs. ARN Media Limited
Performance |
| Timeline |
| Northern Star Resources |
| ARN Media Limited |
Northern Star and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and ARN Media
The main advantage of trading using opposite Northern Star and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Northern Star vs. MetalsGrove Mining | Northern Star vs. Lendlease Group | Northern Star vs. Dicker Data | Northern Star vs. DY6 Metals |
| ARN Media vs. Qbe Insurance Group | ARN Media vs. AiMedia Technologies | ARN Media vs. COAST ENTERTAINMENT HOLDINGS | ARN Media vs. Nufarm Finance NZ |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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