Correlation Between Northern Star and De Grey
Can any of the company-specific risk be diversified away by investing in both Northern Star and De Grey 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 De Grey 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 De Grey Mining, you can compare the effects of market volatilities on Northern Star and De Grey 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 De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and De Grey.
Diversification Opportunities for Northern Star and De Grey
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and DEG is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining 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 De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Northern Star i.e., Northern Star and De Grey go up and down completely randomly.
Pair Corralation between Northern Star and De Grey
Assuming the 90 days trading horizon Northern Star is expected to generate 1.07 times less return on investment than De Grey. In addition to that, Northern Star is 1.03 times more volatile than De Grey Mining. It trades about 0.07 of its total potential returns per unit of risk. De Grey Mining is currently generating about 0.08 per unit of volatility. If you would invest 139.00 in De Grey Mining on August 28, 2024 and sell it today you would earn a total of 9.00 from holding De Grey Mining or generate 6.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Star Resources vs. De Grey Mining
Performance |
| Timeline |
| Northern Star Resources |
| De Grey Mining |
Northern Star and De Grey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and De Grey
The main advantage of trading using opposite Northern Star and De Grey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, De Grey 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 De Grey will offset losses from the drop in De Grey's long position.| Northern Star vs. Australian Unity Office | Northern Star vs. Centuria Industrial Reit | Northern Star vs. Green Technology Metals | Northern Star vs. Computershare |
| De Grey vs. Aurelia Metals | De Grey vs. Austco Healthcare | De Grey vs. Health and Plant | De Grey vs. Alto Metals |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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