Correlation Between Northern Star and Gold Road
Can any of the company-specific risk be diversified away by investing in both Northern Star and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Northern Star and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Gold Road.
Diversification Opportunities for Northern Star and Gold Road
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Gold is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Northern Star i.e., Northern Star and Gold Road go up and down completely randomly.
Pair Corralation between Northern Star and Gold Road
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 1.05 times more return on investment than Gold Road. However, Northern Star is 1.05 times more volatile than Gold Road Resources. It trades about 0.0 of its potential returns per unit of risk. Gold Road Resources is currently generating about -0.04 per unit of risk. If you would invest 1,728 in Northern Star Resources on August 29, 2024 and sell it today you would lose (10.00) from holding Northern Star Resources or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Star Resources vs. Gold Road Resources
Performance |
| Timeline |
| Northern Star Resources |
| Gold Road Resources |
Northern Star and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Gold Road
The main advantage of trading using opposite Northern Star and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road'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 |
| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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