Correlation Between Maple Gold and Northern Star

Can any of the company-specific risk be diversified away by investing in both Maple 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 Maple 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 Maple Gold Mines and Northern Star Resources, you can compare the effects of market volatilities on Maple 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 Maple Gold with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Gold and Northern Star.

Diversification Opportunities for Maple Gold and Northern Star

-0.24

Correlation Coefficient

Maple Gold  Northern Star

Very good diversification

The 3 months correlation between Maple and Northern is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Maple Gold Mines 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 Maple 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 Maple Gold Mines 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 Maple Gold i.e., Maple Gold and Northern Star go up and down completely randomly.

Pair Corralation between Maple Gold and Northern Star

Assuming the 90 days horizon Maple Gold Mines is expected to under-perform the Northern Star. In addition to that, Maple Gold is 2.97 times more volatile than Northern Star Resources. It trades about -0.13 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.05 per unit of volatility. If you would invest  1,115  in Northern Star Resources on August 31, 2024 and sell it today you would earn a total of  25.00  from holding Northern Star Resources or generate 2.24% return on investment over 90 days.

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

Maple Gold Mines  vs.  Northern Star Resources

Maple Gold Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maple Gold Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Northern Star Resources

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Star Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northern Star reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maple Gold and Northern Star

The main advantage of trading using opposite Maple Gold and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple 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.

The idea behind Maple Gold Mines 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.