Correlation Between Westshore Terminals and Northstar Clean

Can any of the company-specific risk be diversified away by investing in both Westshore Terminals and Northstar Clean 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 Westshore Terminals and Northstar Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Westshore Terminals Investment and Northstar Clean Technologies, you can compare the effects of market volatilities on Westshore Terminals and Northstar Clean 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 Westshore Terminals with a short position of Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westshore Terminals and Northstar Clean.

Diversification Opportunities for Westshore Terminals and Northstar Clean

-0.56

Correlation Coefficient

Westshore Terminals  Northstar Clean

Excellent diversification

The 3 months correlation between Westshore and Northstar is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Westshore Terminals Investment and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech and Westshore Terminals 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 Westshore Terminals Investment are associated (or correlated) with Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of Westshore Terminals i.e., Westshore Terminals and Northstar Clean go up and down completely randomly.

Pair Corralation between Westshore Terminals and Northstar Clean

Assuming the 90 days trading horizon Westshore Terminals is expected to generate 11.55 times less return on investment than Northstar Clean. But when comparing it to its historical volatility, Westshore Terminals Investment is 3.53 times less risky than Northstar Clean. It trades about 0.02 of its potential returns per unit of risk. Northstar Clean Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Northstar Clean Technologies on September 21, 2024 and sell it today you would earn a total of  18.00  from holding Northstar Clean Technologies or generate 112.5% return on investment over 90 days.

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

Westshore Terminals Investment  vs.  Northstar Clean Technologies

Westshore Terminals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westshore Terminals Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Northstar Clean Tech

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Northstar Clean showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Westshore Terminals and Northstar Clean

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

The idea behind Westshore Terminals Investment and Northstar Clean Technologies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.