Correlation Between Northern Star and Emetals
Can any of the company-specific risk be diversified away by investing in both Northern Star and Emetals 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 Emetals 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 Emetals, you can compare the effects of market volatilities on Northern Star and Emetals 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 Emetals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Emetals.
Diversification Opportunities for Northern Star and Emetals
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northern and Emetals is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Emetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emetals 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 Emetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emetals has no effect on the direction of Northern Star i.e., Northern Star and Emetals go up and down completely randomly.
Pair Corralation between Northern Star and Emetals
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.36 times more return on investment than Emetals. However, Northern Star Resources is 2.77 times less risky than Emetals. It trades about 0.36 of its potential returns per unit of risk. Emetals is currently generating about 0.02 per unit of risk. If you would invest 1,567 in Northern Star Resources on November 5, 2024 and sell it today you would earn a total of 163.00 from holding Northern Star Resources or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Star Resources vs. Emetals
Performance |
| Timeline |
| Northern Star Resources |
| Emetals |
Northern Star and Emetals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Emetals
The main advantage of trading using opposite Northern Star and Emetals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Emetals 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 Emetals will offset losses from the drop in Emetals' long position.| Northern Star vs. Argo Investments | Northern Star vs. Queste Communications | Northern Star vs. Sky Metals | Northern Star vs. Stelar Metals |
| Emetals vs. Northern Star Resources | Emetals vs. Evolution Mining | Emetals vs. Bluescope Steel | Emetals vs. De Grey Mining |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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