Correlation Between Northern Star and Peel Mining
Can any of the company-specific risk be diversified away by investing in both Northern Star and Peel 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 Peel 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 Peel Mining, you can compare the effects of market volatilities on Northern Star and Peel 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 Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Peel Mining.
Diversification Opportunities for Northern Star and Peel Mining
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and Peel is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Peel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining has no effect on the direction of Northern Star i.e., Northern Star and Peel Mining go up and down completely randomly.
Pair Corralation between Northern Star and Peel Mining
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.92 times more return on investment than Peel Mining. However, Northern Star Resources is 1.08 times less risky than Peel Mining. It trades about -0.1 of its potential returns per unit of risk. Peel Mining is currently generating about -0.11 per unit of risk. If you would invest 1,774 in Northern Star Resources on September 4, 2024 and sell it today you would lose (115.00) from holding Northern Star Resources or give up 6.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Star Resources vs. Peel Mining
Performance |
| Timeline |
| Northern Star Resources |
| Peel Mining |
Northern Star and Peel Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Peel Mining
The main advantage of trading using opposite Northern Star and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Peel 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 Peel Mining will offset losses from the drop in Peel Mining's long position.| Northern Star vs. Pinnacle Investment Management | Northern Star vs. Clime Investment Management | Northern Star vs. Diversified United Investment | Northern Star vs. Platinum Asset Management |
| Peel Mining vs. Northern Star Resources | Peel Mining vs. Evolution Mining | Peel Mining vs. Bluescope Steel | Peel Mining 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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