Correlation Between Northstar Clean and 02005NBJ8

Can any of the company-specific risk be diversified away by investing in both Northstar Clean and 02005NBJ8 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 02005NBJ8 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 ALLY FINANCIAL INC, you can compare the effects of market volatilities on Northstar Clean and 02005NBJ8 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 02005NBJ8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and 02005NBJ8.

Diversification Opportunities for Northstar Clean and 02005NBJ8

-0.44

Correlation Coefficient

Northstar Clean  02005NBJ8

Very good diversification

The 3 months correlation between Northstar and 02005NBJ8 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and ALLY FINANCIAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLY FINANCIAL INC 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 02005NBJ8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLY FINANCIAL INC has no effect on the direction of Northstar Clean i.e., Northstar Clean and 02005NBJ8 go up and down completely randomly.

Pair Corralation between Northstar Clean and 02005NBJ8

Assuming the 90 days horizon Northstar Clean Technologies is expected to generate 22.52 times more return on investment than 02005NBJ8. However, Northstar Clean is 22.52 times more volatile than ALLY FINANCIAL INC. It trades about 0.25 of its potential returns per unit of risk. ALLY FINANCIAL INC is currently generating about -0.11 per unit of risk. If you would invest  20.00  in Northstar Clean Technologies on October 7, 2024 and sell it today you would earn a total of  9.00  from holding Northstar Clean Technologies or generate 45.0% 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.  ALLY FINANCIAL INC

Northstar Clean Tech

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 21 (%) 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.

ALLY FINANCIAL INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLY FINANCIAL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 02005NBJ8 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Northstar Clean and 02005NBJ8

The main advantage of trading using opposite Northstar Clean and 02005NBJ8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean position performs unexpectedly, 02005NBJ8 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 02005NBJ8 will offset losses from the drop in 02005NBJ8's long position.

The idea behind Northstar Clean Technologies and ALLY FINANCIAL INC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.