Correlation Between Torex Gold and Northern Star
Can any of the company-specific risk be diversified away by investing in both Torex Gold 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 Torex Gold and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Torex Gold Resources and Northern Star Resources, you can compare the effects of market volatilities on Torex Gold 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 Torex Gold with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torex Gold and Northern Star.
Diversification Opportunities for Torex Gold and Northern Star
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Torex and Northern is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Torex Gold Resources 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 Torex Gold 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 Torex Gold Resources 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 Torex Gold i.e., Torex Gold and Northern Star go up and down completely randomly.
Pair Corralation between Torex Gold and Northern Star
Assuming the 90 days horizon Torex Gold Resources is expected to generate 0.87 times more return on investment than Northern Star. However, Torex Gold Resources is 1.15 times less risky than Northern Star. It trades about 0.04 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.03 per unit of risk. If you would invest 1,360 in Torex Gold Resources on October 21, 2024 and sell it today you would earn a total of 564.00 from holding Torex Gold Resources or generate 41.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.94% |
| Values | Daily Returns |
Torex Gold Resources vs. Northern Star Resources
Performance |
| Timeline |
| Torex Gold Resources |
| Northern Star Resources |
Torex Gold and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Torex Gold and Northern Star
The main advantage of trading using opposite Torex Gold and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Torex Gold 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.| Torex Gold vs. BRC Inc | Torex Gold vs. Ispire Technology Common | Torex Gold vs. Radcom | Torex Gold vs. NETGEAR |
| Northern Star vs. Regis Resources | Northern Star vs. West African Resources | Northern Star vs. Dundee Precious Metals | Northern Star vs. Maple Gold Mines |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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