Correlation Between Tesla and Northern Star
Can any of the company-specific risk be diversified away by investing in both Tesla 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 Tesla and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Northern Star Resources, you can compare the effects of market volatilities on Tesla 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 Tesla with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Northern Star.
Diversification Opportunities for Tesla and Northern Star
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tesla and Northern is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc 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 Tesla 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 Tesla Inc 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 Tesla i.e., Tesla and Northern Star go up and down completely randomly.
Pair Corralation between Tesla and Northern Star
Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Northern Star. In addition to that, Tesla is 1.75 times more volatile than Northern Star Resources. It trades about -0.29 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.21 per unit of volatility. If you would invest 1,041 in Northern Star Resources on November 18, 2024 and sell it today you would earn a total of 76.00 from holding Northern Star Resources or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tesla Inc vs. Northern Star Resources
Performance |
| Timeline |
| Tesla Inc |
| Northern Star Resources |
Tesla and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Northern Star
The main advantage of trading using opposite Tesla and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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.The idea behind Tesla Inc and Northern Star Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Northern Star vs. ZIJIN MINH UNSPADR20 | Northern Star vs. Newmont | Northern Star vs. Barrick Gold | Northern Star vs. Franco Nevada |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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