Correlation Between Stelar Metals and Northern Star
Can any of the company-specific risk be diversified away by investing in both Stelar Metals and Northern Star 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 Stelar Metals and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stelar Metals and Northern Star Resources, you can compare the effects of market volatilities on Stelar Metals and Northern Star 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 Stelar Metals with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and Northern Star.
Diversification Opportunities for Stelar Metals and Northern Star
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stelar and Northern is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources and Stelar Metals 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 Stelar Metals are associated (or correlated) with Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of Stelar Metals i.e., Stelar Metals and Northern Star go up and down completely randomly.
Pair Corralation between Stelar Metals and Northern Star
Assuming the 90 days trading horizon Stelar Metals is expected to under-perform the Northern Star. In addition to that, Stelar Metals is 2.78 times more volatile than Northern Star Resources. It trades about -0.03 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.05 per unit of volatility. If you would invest 1,262 in Northern Star Resources on August 31, 2024 and sell it today you would earn a total of 489.00 from holding Northern Star Resources or generate 38.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stelar Metals vs. Northern Star Resources
Performance |
| Timeline |
| Stelar Metals |
| Northern Star Resources |
Stelar Metals and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and Northern Star
The main advantage of trading using opposite Stelar Metals and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar Metals position performs unexpectedly, Northern Star 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 Northern Star will offset losses from the drop in Northern Star's long position.| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. De Grey Mining |
| Northern Star vs. WiseTech Global Limited | Northern Star vs. Oneview Healthcare PLC | Northern Star vs. Land Homes Group | Northern Star vs. Healthco Healthcare and |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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