Correlation Between American Pacific and Northern Star
Can any of the company-specific risk be diversified away by investing in both American Pacific 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 American Pacific and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Pacific Mining and Northern Star Resources, you can compare the effects of market volatilities on American Pacific 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 American Pacific with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Pacific and Northern Star.
Diversification Opportunities for American Pacific and Northern Star
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Northern is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Pacific Mining 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 American Pacific 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 American Pacific Mining 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 American Pacific i.e., American Pacific and Northern Star go up and down completely randomly.
Pair Corralation between American Pacific and Northern Star
Assuming the 90 days horizon American Pacific Mining is expected to generate 4.79 times more return on investment than Northern Star. However, American Pacific is 4.79 times more volatile than Northern Star Resources. It trades about 0.32 of its potential returns per unit of risk. Northern Star Resources is currently generating about -0.05 per unit of risk. If you would invest 9.27 in American Pacific Mining on September 2, 2024 and sell it today you would earn a total of 8.73 from holding American Pacific Mining or generate 94.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Pacific Mining vs. Northern Star Resources
Performance |
| Timeline |
| American Pacific Mining |
| Northern Star Resources |
American Pacific and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Pacific and Northern Star
The main advantage of trading using opposite American Pacific and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Pacific 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.| American Pacific vs. Westward Gold | American Pacific vs. Heliostar Metals | American Pacific vs. Revival Gold | American Pacific vs. Cabral Gold |
| Northern Star vs. Aurion Resources | Northern Star vs. Rio2 Limited | Northern Star vs. Palamina Corp | Northern Star vs. BTU Metals Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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