Correlation Between Northern Star and Albion Resources
Can any of the company-specific risk be diversified away by investing in both Northern Star and Albion Resources 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 Albion Resources 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 Albion Resources Limited, you can compare the effects of market volatilities on Northern Star and Albion Resources 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 Albion Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Albion Resources.
Diversification Opportunities for Northern Star and Albion Resources
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and Albion is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Albion Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albion Resources 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 Albion Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albion Resources has no effect on the direction of Northern Star i.e., Northern Star and Albion Resources go up and down completely randomly.
Pair Corralation between Northern Star and Albion Resources
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.76 times more return on investment than Albion Resources. However, Northern Star Resources is 1.32 times less risky than Albion Resources. It trades about 0.1 of its potential returns per unit of risk. Albion Resources Limited is currently generating about 0.06 per unit of risk. If you would invest 1,504 in Northern Star Resources on September 12, 2024 and sell it today you would earn a total of 186.00 from holding Northern Star Resources or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Northern Star Resources vs. Albion Resources Limited
Performance |
| Timeline |
| Northern Star Resources |
| Albion Resources |
Northern Star and Albion Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Albion Resources
The main advantage of trading using opposite Northern Star and Albion Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Albion Resources 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 Albion Resources will offset losses from the drop in Albion Resources' long position.| Northern Star vs. Pinnacle Investment Management | Northern Star vs. Diversified United Investment | Northern Star vs. Data3 | Northern Star vs. Stelar Metals |
| Albion Resources vs. Energy Technologies Limited | Albion Resources vs. Hansen Technologies | Albion Resources vs. Mach7 Technologies | Albion Resources vs. Seven West Media |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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