Correlation Between Strickland Metals and Northern Star
Can any of the company-specific risk be diversified away by investing in both Strickland 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 Strickland 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 Strickland Metals and Northern Star Resources, you can compare the effects of market volatilities on Strickland 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 Strickland Metals with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strickland Metals and Northern Star.
Diversification Opportunities for Strickland Metals and Northern Star
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Strickland and Northern is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Strickland 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 Strickland 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 Strickland 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 Strickland Metals i.e., Strickland Metals and Northern Star go up and down completely randomly.
Pair Corralation between Strickland Metals and Northern Star
Assuming the 90 days trading horizon Strickland Metals is expected to generate 15.6 times less return on investment than Northern Star. In addition to that, Strickland Metals is 2.9 times more volatile than Northern Star Resources. It trades about 0.0 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.08 per unit of volatility. If you would invest 1,301 in Northern Star Resources on August 29, 2024 and sell it today you would earn a total of 417.00 from holding Northern Star Resources or generate 32.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strickland Metals vs. Northern Star Resources
Performance |
| Timeline |
| Strickland Metals |
| Northern Star Resources |
Strickland Metals and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strickland Metals and Northern Star
The main advantage of trading using opposite Strickland Metals and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strickland 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.| Strickland Metals vs. Northern Star Resources | Strickland Metals vs. Evolution Mining | Strickland Metals vs. Bluescope Steel | Strickland Metals vs. Sandfire Resources NL |
| Northern Star vs. Hutchison Telecommunications | Northern Star vs. National Storage REIT | Northern Star vs. ACDC Metals | Northern Star vs. MotorCycle Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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