Correlation Between Northern Star and Aspire Mining
Can any of the company-specific risk be diversified away by investing in both Northern Star and Aspire Mining 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 Northern Star and Aspire Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Star Resources and Aspire Mining, you can compare the effects of market volatilities on Northern Star and Aspire Mining 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 Northern Star with a short position of Aspire Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Aspire Mining.
Diversification Opportunities for Northern Star and Aspire Mining
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northern and Aspire is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Aspire Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspire Mining and Northern Star 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 Northern Star Resources are associated (or correlated) with Aspire Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspire Mining has no effect on the direction of Northern Star i.e., Northern Star and Aspire Mining go up and down completely randomly.
Pair Corralation between Northern Star and Aspire Mining
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.27 times more return on investment than Aspire Mining. However, Northern Star Resources is 3.75 times less risky than Aspire Mining. It trades about 0.19 of its potential returns per unit of risk. Aspire Mining is currently generating about 0.05 per unit of risk. If you would invest 1,534 in Northern Star Resources on December 30, 2024 and sell it today you would earn a total of 329.00 from holding Northern Star Resources or generate 21.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Northern Star Resources vs. Aspire Mining
Performance |
Timeline |
Northern Star Resources |
Aspire Mining |
Northern Star and Aspire Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Northern Star and Aspire Mining
The main advantage of trading using opposite Northern Star and Aspire Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Aspire Mining 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 Aspire Mining will offset losses from the drop in Aspire Mining's long position.Northern Star vs. Black Rock Mining | Northern Star vs. Super Retail Group | Northern Star vs. MetalsGrove Mining | Northern Star vs. Group 6 Metals |
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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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