Correlation Between Northern Star and Archer Exploration
Can any of the company-specific risk be diversified away by investing in both Northern Star and Archer Exploration 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 Archer Exploration 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 Archer Exploration, you can compare the effects of market volatilities on Northern Star and Archer Exploration 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 Archer Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Archer Exploration.
Diversification Opportunities for Northern Star and Archer Exploration
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Archer is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Archer Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Exploration 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 Archer Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Exploration has no effect on the direction of Northern Star i.e., Northern Star and Archer Exploration go up and down completely randomly.
Pair Corralation between Northern Star and Archer Exploration
Assuming the 90 days trading horizon Northern Star Resources is expected to under-perform the Archer Exploration. But the stock apears to be less risky and, when comparing its historical volatility, Northern Star Resources is 2.83 times less risky than Archer Exploration. The stock trades about -0.1 of its potential returns per unit of risk. The Archer Exploration is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Archer Exploration on September 4, 2024 and sell it today you would earn a total of 4.00 from holding Archer Exploration or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Star Resources vs. Archer Exploration
Performance |
| Timeline |
| Northern Star Resources |
| Archer Exploration |
Northern Star and Archer Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Archer Exploration
The main advantage of trading using opposite Northern Star and Archer Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Archer Exploration 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 Archer Exploration will offset losses from the drop in Archer Exploration's long position.| Northern Star vs. Pinnacle Investment Management | Northern Star vs. Clime Investment Management | Northern Star vs. Diversified United Investment | Northern Star vs. Platinum Asset Management |
| Archer Exploration vs. Lendlease Group | Archer Exploration vs. Commonwealth Bank of | Archer Exploration vs. Collins Foods | Archer Exploration vs. My Foodie Box |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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