Correlation Between Northern Dynasty and United States

Can any of the company-specific risk be diversified away by investing in both Northern Dynasty and United States 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 Dynasty and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Northern Dynasty Minerals and United States Antimony, you can compare the effects of market volatilities on Northern Dynasty and United States 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 Dynasty with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Dynasty and United States.

Diversification Opportunities for Northern Dynasty and United States

-0.39

Correlation Coefficient

Northern Dynasty  United States

Very good diversification

The 3 months correlation between Northern and United is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Northern Dynasty Minerals and United States Antimony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Antimony and Northern Dynasty 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 Dynasty Minerals are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Antimony has no effect on the direction of Northern Dynasty i.e., Northern Dynasty and United States go up and down completely randomly.

Pair Corralation between Northern Dynasty and United States

Considering the 90-day investment horizon Northern Dynasty Minerals is expected to generate 0.91 times more return on investment than United States. However, Northern Dynasty Minerals is 1.1 times less risky than United States. It trades about 0.1 of its potential returns per unit of risk. United States Antimony is currently generating about 0.05 per unit of risk. If you would invest  34.00  in Northern Dynasty Minerals on September 2, 2024 and sell it today you would earn a total of  10.00  from holding Northern Dynasty Minerals or generate 29.41% return on investment over 90 days.

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

Northern Dynasty Minerals  vs.  United States Antimony

Northern Dynasty Minerals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Dynasty Minerals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Northern Dynasty disclosed solid returns over the last few months and may actually be approaching a breakup point.

United States Antimony

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United States Antimony are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting primary indicators, United States showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northern Dynasty and United States

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

The idea behind Northern Dynasty Minerals and United States Antimony 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.