Correlation Between Northstar Clean and Mammoth Resources

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

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

Diversification Opportunities for Northstar Clean and Mammoth Resources

-0.35

Correlation Coefficient

Northstar Clean  Mammoth Resources

Very good diversification

The 3 months correlation between Northstar and Mammoth is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and Mammoth Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mammoth Resources Corp and Northstar Clean 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 Northstar Clean Technologies are associated (or correlated) with Mammoth Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mammoth Resources Corp has no effect on the direction of Northstar Clean i.e., Northstar Clean and Mammoth Resources go up and down completely randomly.

Pair Corralation between Northstar Clean and Mammoth Resources

Assuming the 90 days trading horizon Northstar Clean is expected to generate 1.52 times less return on investment than Mammoth Resources. But when comparing it to its historical volatility, Northstar Clean Technologies is 3.0 times less risky than Mammoth Resources. It trades about 0.13 of its potential returns per unit of risk. Mammoth Resources Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Mammoth Resources Corp on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Mammoth Resources Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

Northstar Clean Technologies  vs.  Mammoth Resources Corp

Northstar Clean Tech

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Northstar Clean showed solid returns over the last few months and may actually be approaching a breakup point.

Mammoth Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mammoth Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mammoth Resources is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Northstar Clean and Mammoth Resources

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

The idea behind Northstar Clean Technologies and Mammoth Resources Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.