Correlation Between Northern Star and Renascor Resources
Can any of the company-specific risk be diversified away by investing in both Northern Star and Renascor Resources 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 Renascor Resources 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 Renascor Resources, you can compare the effects of market volatilities on Northern Star and Renascor Resources 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 Renascor Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Renascor Resources.
Diversification Opportunities for Northern Star and Renascor Resources
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and Renascor is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Renascor Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renascor 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 Renascor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renascor Resources has no effect on the direction of Northern Star i.e., Northern Star and Renascor Resources go up and down completely randomly.
Pair Corralation between Northern Star and Renascor Resources
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.36 times more return on investment than Renascor Resources. However, Northern Star Resources is 2.81 times less risky than Renascor Resources. It trades about 0.4 of its potential returns per unit of risk. Renascor Resources is currently generating about 0.04 per unit of risk. If you would invest 1,550 in Northern Star Resources on October 23, 2024 and sell it today you would earn a total of 149.00 from holding Northern Star Resources or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Star Resources vs. Renascor Resources
Performance |
| Timeline |
| Northern Star Resources |
| Renascor Resources |
Northern Star and Renascor Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Renascor Resources
The main advantage of trading using opposite Northern Star and Renascor Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Renascor Resources 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 Renascor Resources will offset losses from the drop in Renascor Resources' long position.| Northern Star vs. Navigator Global Investments | Northern Star vs. Argo Investments | Northern Star vs. Dug Technology | Northern Star vs. Clime Investment Management |
| Renascor Resources vs. Northern Star Resources | Renascor Resources vs. Evolution Mining | Renascor Resources vs. Bluescope Steel | Renascor Resources 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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