Correlation Between Northstar Clean and United Fire
Can any of the company-specific risk be diversified away by investing in both Northstar Clean and United Fire 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 United Fire 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 United Fire Group, you can compare the effects of market volatilities on Northstar Clean and United Fire 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 United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and United Fire.
Diversification Opportunities for Northstar Clean and United Fire
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northstar and United is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group 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 United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of Northstar Clean i.e., Northstar Clean and United Fire go up and down completely randomly.
Pair Corralation between Northstar Clean and United Fire
Assuming the 90 days horizon Northstar Clean is expected to generate 1.01 times less return on investment than United Fire. In addition to that, Northstar Clean is 1.5 times more volatile than United Fire Group. It trades about 0.24 of its total potential returns per unit of risk. United Fire Group is currently generating about 0.36 per unit of volatility. If you would invest 2,534 in United Fire Group on September 12, 2024 and sell it today you would earn a total of 541.00 from holding United Fire Group or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northstar Clean Technologies vs. United Fire Group
Performance |
| Timeline |
| Northstar Clean Tech |
| United Fire Group |
Northstar Clean and United Fire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northstar Clean and United Fire
The main advantage of trading using opposite Northstar Clean and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean position performs unexpectedly, United Fire 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 United Fire will offset losses from the drop in United Fire's long position.| Northstar Clean vs. Susglobal Energy Corp | Northstar Clean vs. LanzaTech Global | Northstar Clean vs. Aqua Metals | Northstar Clean vs. LiCycle Holdings Corp |
| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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