Correlation Between Northstar Clean and Canaf Investments
Can any of the company-specific risk be diversified away by investing in both Northstar Clean and Canaf Investments 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 Northstar Clean and Canaf Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northstar Clean Technologies and Canaf Investments, you can compare the effects of market volatilities on Northstar Clean and Canaf Investments 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 Northstar Clean with a short position of Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and Canaf Investments.
Diversification Opportunities for Northstar Clean and Canaf Investments
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northstar and Canaf is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments and Northstar Clean 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 Northstar Clean Technologies are associated (or correlated) with Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of Northstar Clean i.e., Northstar Clean and Canaf Investments go up and down completely randomly.
Pair Corralation between Northstar Clean and Canaf Investments
Assuming the 90 days trading horizon Northstar Clean Technologies is expected to generate 1.4 times more return on investment than Canaf Investments. However, Northstar Clean is 1.4 times more volatile than Canaf Investments. It trades about 0.09 of its potential returns per unit of risk. Canaf Investments is currently generating about 0.08 per unit of risk. If you would invest 13.00 in Northstar Clean Technologies on September 4, 2024 and sell it today you would earn a total of 18.00 from holding Northstar Clean Technologies or generate 138.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northstar Clean Technologies vs. Canaf Investments
Performance |
| Timeline |
| Northstar Clean Tech |
| Canaf Investments |
Northstar Clean and Canaf Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northstar Clean and Canaf Investments
The main advantage of trading using opposite Northstar Clean and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' long position.The idea behind Northstar Clean Technologies and Canaf Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Canaf Investments vs. First Majestic Silver | Canaf Investments vs. Ivanhoe Energy | Canaf Investments vs. Orezone Gold Corp | Canaf Investments vs. Faraday Copper Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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