Correlation Between Step One and Northern Star
Can any of the company-specific risk be diversified away by investing in both Step One 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 Step One and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Step One Clothing and Northern Star Resources, you can compare the effects of market volatilities on Step One 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 Step One with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Step One and Northern Star.
Diversification Opportunities for Step One and Northern Star
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Step and Northern is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Step One Clothing 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 Step One 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 Step One Clothing 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 Step One i.e., Step One and Northern Star go up and down completely randomly.
Pair Corralation between Step One and Northern Star
Assuming the 90 days trading horizon Step One is expected to generate 5.11 times less return on investment than Northern Star. In addition to that, Step One is 1.82 times more volatile than Northern Star Resources. It trades about 0.04 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.39 per unit of volatility. If you would invest 1,545 in Northern Star Resources on November 3, 2024 and sell it today you would earn a total of 185.00 from holding Northern Star Resources or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Step One Clothing vs. Northern Star Resources
Performance |
| Timeline |
| Step One Clothing |
| Northern Star Resources |
Step One and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Step One and Northern Star
The main advantage of trading using opposite Step One and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Step One 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.| Step One vs. Qbe Insurance Group | Step One vs. Queste Communications | Step One vs. Aussie Broadband | Step One vs. Auswide Bank |
| Northern Star vs. DY6 Metals | Northern Star vs. Truscott Mining Corp | Northern Star vs. Norfolk Metals | Northern Star vs. MetalsGrove 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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