Correlation Between Northstar Clean and Allient

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

Diversification Opportunities for Northstar Clean and Allient

0.66

Correlation Coefficient

Northstar Clean  Allient

Poor diversification

The 3 months correlation between Northstar and Allient is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Northstar Clean i.e., Northstar Clean and Allient go up and down completely randomly.

Pair Corralation between Northstar Clean and Allient

Assuming the 90 days horizon Northstar Clean Technologies is expected to under-perform the Allient. In addition to that, Northstar Clean is 1.1 times more volatile than Allient. It trades about -0.19 of its total potential returns per unit of risk. Allient is currently generating about 0.16 per unit of volatility. If you would invest  2,455  in Allient on October 26, 2024 and sell it today you would earn a total of  203.00  from holding Allient or generate 8.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Northstar Clean Technologies  vs.  Allient

Northstar Clean Tech

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northstar Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Allient

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northstar Clean and Allient

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

The idea behind Northstar Clean Technologies and Allient 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.