Correlation Between Northern Star and Ragnar Metals
Can any of the company-specific risk be diversified away by investing in both Northern Star and Ragnar Metals 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 Ragnar Metals 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 Ragnar Metals, you can compare the effects of market volatilities on Northern Star and Ragnar Metals 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 Ragnar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Ragnar Metals.
Diversification Opportunities for Northern Star and Ragnar Metals
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and Ragnar is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Ragnar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ragnar Metals 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 Ragnar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ragnar Metals has no effect on the direction of Northern Star i.e., Northern Star and Ragnar Metals go up and down completely randomly.
Pair Corralation between Northern Star and Ragnar Metals
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.75 times more return on investment than Ragnar Metals. However, Northern Star Resources is 1.33 times less risky than Ragnar Metals. It trades about -0.01 of its potential returns per unit of risk. Ragnar Metals is currently generating about -0.05 per unit of risk. If you would invest 1,774 in Northern Star Resources on September 3, 2024 and sell it today you would lose (23.00) from holding Northern Star Resources or give up 1.3% 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. Ragnar Metals
Performance |
| Timeline |
| Northern Star Resources |
| Ragnar Metals |
Northern Star and Ragnar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Ragnar Metals
The main advantage of trading using opposite Northern Star and Ragnar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Ragnar Metals 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 Ragnar Metals will offset losses from the drop in Ragnar Metals' long position.| Northern Star vs. MetalsGrove Mining | Northern Star vs. Lendlease Group | Northern Star vs. Dicker Data | Northern Star vs. DY6 Metals |
| Ragnar Metals vs. Computershare | Ragnar Metals vs. Hotel Property Investments | Ragnar Metals vs. Ras Technology Holdings | Ragnar Metals vs. Carlton Investments |
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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