Correlation Between Blue Sky and Northstar Clean

Can any of the company-specific risk be diversified away by investing in both Blue Sky and Northstar Clean 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 Blue Sky and Northstar Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Sky Uranium and Northstar Clean Technologies, you can compare the effects of market volatilities on Blue Sky and Northstar Clean 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 Blue Sky with a short position of Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Sky and Northstar Clean.

Diversification Opportunities for Blue Sky and Northstar Clean

0.65

Correlation Coefficient

Blue Sky  Northstar Clean

Poor diversification

The 3 months correlation between Blue and Northstar is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sky Uranium and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech and Blue Sky 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 Blue Sky Uranium are associated (or correlated) with Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of Blue Sky i.e., Blue Sky and Northstar Clean go up and down completely randomly.

Pair Corralation between Blue Sky and Northstar Clean

Assuming the 90 days horizon Blue Sky Uranium is expected to under-perform the Northstar Clean. In addition to that, Blue Sky is 2.44 times more volatile than Northstar Clean Technologies. It trades about -0.02 of its total potential returns per unit of risk. Northstar Clean Technologies is currently generating about 0.04 per unit of volatility. If you would invest  35.00  in Northstar Clean Technologies on December 22, 2024 and sell it today you would earn a total of  2.00  from holding Northstar Clean Technologies or generate 5.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Blue Sky Uranium  vs.  Northstar Clean Technologies

Blue Sky Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Sky Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Northstar Clean Tech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Northstar Clean may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Blue Sky and Northstar Clean

The main advantage of trading using opposite Blue Sky and Northstar Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Sky position performs unexpectedly, Northstar Clean 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 Northstar Clean will offset losses from the drop in Northstar Clean's long position.

The idea behind Blue Sky Uranium and Northstar Clean Technologies 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.