Correlation Between Northern Minerals and Impala Platinum

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

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

Diversification Opportunities for Northern Minerals and Impala Platinum

0.36

Correlation Coefficient

Northern Minerals  Impala Platinum

Weak diversification

The 3 months correlation between Northern and Impala is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Northern Minerals Exploration and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings and Northern Minerals 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 Minerals Exploration are associated (or correlated) with Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Northern Minerals i.e., Northern Minerals and Impala Platinum go up and down completely randomly.

Pair Corralation between Northern Minerals and Impala Platinum

Given the investment horizon of 90 days Northern Minerals Exploration is expected to under-perform the Impala Platinum. In addition to that, Northern Minerals is 2.32 times more volatile than Impala Platinum Holdings. It trades about -0.1 of its total potential returns per unit of risk. Impala Platinum Holdings is currently generating about 0.07 per unit of volatility. If you would invest  439.00  in Impala Platinum Holdings on February 2, 2024 and sell it today you would earn a total of  21.00  from holding Impala Platinum Holdings or generate 4.78% return on investment over 90 days.

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

Northern Minerals Exploration  vs.  Impala Platinum Holdings

Northern Minerals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Minerals Exploration are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Northern Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Impala Platinum Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Impala Platinum Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Impala Platinum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northern Minerals and Impala Platinum

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

The idea behind Northern Minerals Exploration and Impala Platinum Holdings 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.