Correlation Between Midnight Sun and NorthIsle Copper

Can any of the company-specific risk be diversified away by investing in both Midnight Sun and NorthIsle Copper 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 Midnight Sun and NorthIsle Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Midnight Sun Mining and NorthIsle Copper and, you can compare the effects of market volatilities on Midnight Sun and NorthIsle Copper 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 Midnight Sun with a short position of NorthIsle Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midnight Sun and NorthIsle Copper.

Diversification Opportunities for Midnight Sun and NorthIsle Copper

0.52

Correlation Coefficient

Midnight Sun  NorthIsle Copper

Very weak diversification

The 3 months correlation between Midnight and NorthIsle is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Midnight Sun Mining and NorthIsle Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthIsle Copper and Midnight Sun 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 Midnight Sun Mining are associated (or correlated) with NorthIsle Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthIsle Copper has no effect on the direction of Midnight Sun i.e., Midnight Sun and NorthIsle Copper go up and down completely randomly.

Pair Corralation between Midnight Sun and NorthIsle Copper

Assuming the 90 days horizon Midnight Sun Mining is expected to under-perform the NorthIsle Copper. But the stock apears to be less risky and, when comparing its historical volatility, Midnight Sun Mining is 1.07 times less risky than NorthIsle Copper. The stock trades about -0.18 of its potential returns per unit of risk. The NorthIsle Copper and is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  48.00  in NorthIsle Copper and on December 9, 2024 and sell it today you would earn a total of  19.00  from holding NorthIsle Copper and or generate 39.58% return on investment over 90 days.

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

Midnight Sun Mining  vs.  NorthIsle Copper and

Midnight Sun Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Midnight Sun Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Midnight Sun showed solid returns over the last few months and may actually be approaching a breakup point.

NorthIsle Copper

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NorthIsle Copper and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NorthIsle Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Midnight Sun and NorthIsle Copper

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

The idea behind Midnight Sun Mining and NorthIsle Copper and 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.