Correlation Between Northstar Clean and Pan American

Can any of the company-specific risk be diversified away by investing in both Northstar Clean and Pan American 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 Pan American 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 Pan American Silver, you can compare the effects of market volatilities on Northstar Clean and Pan American 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 Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and Pan American.

Diversification Opportunities for Northstar Clean and Pan American

-0.52

Correlation Coefficient

Northstar Clean  Pan American

Excellent diversification

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

Pair Corralation between Northstar Clean and Pan American

Assuming the 90 days trading horizon Northstar Clean Technologies is expected to generate 2.09 times more return on investment than Pan American. However, Northstar Clean is 2.09 times more volatile than Pan American Silver. It trades about 0.06 of its potential returns per unit of risk. Pan American Silver is currently generating about 0.04 per unit of risk. If you would invest  14.00  in Northstar Clean Technologies on October 22, 2024 and sell it today you would earn a total of  24.00  from holding Northstar Clean Technologies or generate 171.43% return on investment over 90 days.

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

Northstar Clean Technologies  vs.  Pan American Silver

Northstar Clean Tech

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 16 (%) 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.

Pan American Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan American Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Northstar Clean and Pan American

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

The idea behind Northstar Clean Technologies and Pan American Silver 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.