Correlation Between Northstar Clean and PENSKE

Can any of the company-specific risk be diversified away by investing in both Northstar Clean and PENSKE 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 PENSKE 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 PENSKE 57 01 FEB 28, you can compare the effects of market volatilities on Northstar Clean and PENSKE 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 PENSKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and PENSKE.

Diversification Opportunities for Northstar Clean and PENSKE

-0.61

Correlation Coefficient

Northstar Clean  PENSKE

Excellent diversification

The 3 months correlation between Northstar and PENSKE is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and PENSKE 57 01 FEB 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENSKE 57 01 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 PENSKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENSKE 57 01 has no effect on the direction of Northstar Clean i.e., Northstar Clean and PENSKE go up and down completely randomly.

Pair Corralation between Northstar Clean and PENSKE

Assuming the 90 days horizon Northstar Clean Technologies is expected to generate 6.41 times more return on investment than PENSKE. However, Northstar Clean is 6.41 times more volatile than PENSKE 57 01 FEB 28. It trades about 0.21 of its potential returns per unit of risk. PENSKE 57 01 FEB 28 is currently generating about -0.24 per unit of risk. If you would invest  15.00  in Northstar Clean Technologies on September 25, 2024 and sell it today you would earn a total of  9.00  from holding Northstar Clean Technologies or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	66.67%
Values	Daily Returns

Northstar Clean Technologies  vs.  PENSKE 57 01 FEB 28

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. Despite nearly fragile basic indicators, Northstar Clean reported solid returns over the last few months and may actually be approaching a breakup point.

PENSKE 57 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENSKE 57 01 FEB 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PENSKE 57 01 FEB 28 investors.

Pair Trading with Northstar Clean and PENSKE

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

The idea behind Northstar Clean Technologies and PENSKE 57 01 FEB 28 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.