Correlation Between Northern Star and MetalsGrove Mining
Can any of the company-specific risk be diversified away by investing in both Northern Star and MetalsGrove Mining 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 MetalsGrove Mining 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 MetalsGrove Mining, you can compare the effects of market volatilities on Northern Star and MetalsGrove Mining 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 MetalsGrove Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and MetalsGrove Mining.
Diversification Opportunities for Northern Star and MetalsGrove Mining
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northern and MetalsGrove is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and MetalsGrove Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetalsGrove 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 MetalsGrove Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetalsGrove Mining has no effect on the direction of Northern Star i.e., Northern Star and MetalsGrove Mining go up and down completely randomly.
Pair Corralation between Northern Star and MetalsGrove Mining
Assuming the 90 days trading horizon Northern Star is expected to generate 1.58 times less return on investment than MetalsGrove Mining. But when comparing it to its historical volatility, Northern Star Resources is 4.05 times less risky than MetalsGrove Mining. It trades about 0.09 of its potential returns per unit of risk. MetalsGrove Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5.50 in MetalsGrove Mining on September 3, 2024 and sell it today you would earn a total of 0.00 from holding MetalsGrove Mining or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Star Resources vs. MetalsGrove Mining
Performance |
| Timeline |
| Northern Star Resources |
| MetalsGrove Mining |
Northern Star and MetalsGrove Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and MetalsGrove Mining
The main advantage of trading using opposite Northern Star and MetalsGrove Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, MetalsGrove Mining 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 MetalsGrove Mining will offset losses from the drop in MetalsGrove Mining's long position.| Northern Star vs. MetalsGrove Mining | Northern Star vs. Lendlease Group | Northern Star vs. Dicker Data | Northern Star vs. DY6 Metals |
| MetalsGrove Mining vs. Northern Star Resources | MetalsGrove Mining vs. Evolution Mining | MetalsGrove Mining vs. Bluescope Steel | MetalsGrove Mining vs. Aneka Tambang Tbk |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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