Correlation Between TPG Telecom and Northern Star
Can any of the company-specific risk be diversified away by investing in both TPG Telecom and Northern Star 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 TPG Telecom and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG Telecom and Northern Star Resources, you can compare the effects of market volatilities on TPG Telecom and Northern Star 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 TPG Telecom with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG Telecom and Northern Star.
Diversification Opportunities for TPG Telecom and Northern Star
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TPG and Northern is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding TPG Telecom and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources and TPG Telecom 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 TPG Telecom are associated (or correlated) with Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of TPG Telecom i.e., TPG Telecom and Northern Star go up and down completely randomly.
Pair Corralation between TPG Telecom and Northern Star
Assuming the 90 days trading horizon TPG Telecom is expected to generate 10.84 times less return on investment than Northern Star. But when comparing it to its historical volatility, TPG Telecom is 1.28 times less risky than Northern Star. It trades about 0.01 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,104 in Northern Star Resources on September 26, 2024 and sell it today you would earn a total of 435.00 from holding Northern Star Resources or generate 39.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
TPG Telecom vs. Northern Star Resources
Performance |
Timeline |
TPG Telecom |
Northern Star Resources |
TPG Telecom and Northern Star Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TPG Telecom and Northern Star
The main advantage of trading using opposite TPG Telecom and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG Telecom position performs unexpectedly, Northern Star 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 Northern Star will offset losses from the drop in Northern Star's long position.TPG Telecom vs. A1 Investments Resources | TPG Telecom vs. Diversified United Investment | TPG Telecom vs. Navigator Global Investments | TPG Telecom vs. Garda Diversified Ppty |
Northern Star vs. TPG Telecom | Northern Star vs. Platinum Asset Management | Northern Star vs. Carawine Resources Limited | Northern Star vs. Cleanaway Waste Management |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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