Correlation Between Northern Star and Carlton Investments
Can any of the company-specific risk be diversified away by investing in both Northern Star and Carlton Investments 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 Carlton Investments 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 Carlton Investments, you can compare the effects of market volatilities on Northern Star and Carlton Investments 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 Carlton Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Carlton Investments.
Diversification Opportunities for Northern Star and Carlton Investments
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Carlton is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments 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 Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Northern Star i.e., Northern Star and Carlton Investments go up and down completely randomly.
Pair Corralation between Northern Star and Carlton Investments
Assuming the 90 days trading horizon Northern Star is expected to generate 21.44 times less return on investment than Carlton Investments. In addition to that, Northern Star is 2.68 times more volatile than Carlton Investments. It trades about 0.0 of its total potential returns per unit of risk. Carlton Investments is currently generating about 0.13 per unit of volatility. If you would invest 3,010 in Carlton Investments on August 29, 2024 and sell it today you would earn a total of 79.00 from holding Carlton Investments or generate 2.62% 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. Carlton Investments
Performance |
| Timeline |
| Northern Star Resources |
| Carlton Investments |
Northern Star and Carlton Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Carlton Investments
The main advantage of trading using opposite Northern Star and Carlton Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Carlton Investments 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 Carlton Investments will offset losses from the drop in Carlton Investments' long position.| Northern Star vs. Australian Unity Office | Northern Star vs. Centuria Industrial Reit | Northern Star vs. Green Technology Metals | Northern Star vs. Computershare |
| Carlton Investments vs. Australian Foundation Investment | Carlton Investments vs. GQG Partners DRC | Carlton Investments vs. Metrics Master Income | Carlton Investments vs. L1 Long Short |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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