Correlation Between Solitario Exploration and Northcliff Resources

Can any of the company-specific risk be diversified away by investing in both Solitario Exploration and Northcliff Resources 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 Solitario Exploration and Northcliff Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solitario Exploration Royalty and Northcliff Resources, you can compare the effects of market volatilities on Solitario Exploration and Northcliff Resources 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 Solitario Exploration with a short position of Northcliff Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solitario Exploration and Northcliff Resources.

Diversification Opportunities for Solitario Exploration and Northcliff Resources

0.39

Correlation Coefficient

Solitario Exploration  Northcliff Resources

Weak diversification

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

Pair Corralation between Solitario Exploration and Northcliff Resources

Assuming the 90 days trading horizon Solitario Exploration is expected to generate 109.7 times less return on investment than Northcliff Resources. But when comparing it to its historical volatility, Solitario Exploration Royalty is 3.88 times less risky than Northcliff Resources. It trades about 0.01 of its potential returns per unit of risk. Northcliff Resources is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Northcliff Resources on March 28, 2025 and sell it today you would earn a total of  8.50  from holding Northcliff Resources or generate 242.86% return on investment over 90 days.

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

Solitario Exploration Royalty  vs.  Northcliff Resources

Solitario Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solitario Exploration Royalty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Solitario Exploration is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Northcliff Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northcliff Resources are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Northcliff Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solitario Exploration and Northcliff Resources

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

The idea behind Solitario Exploration Royalty and Northcliff Resources 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.