Correlation Between American High and Northern High
Can any of the company-specific risk be diversified away by investing in both American High and Northern High 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 American High and Northern High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American High Income Municipal and Northern High Yield, you can compare the effects of market volatilities on American High and Northern High 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 American High with a short position of Northern High. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High and Northern High.
Diversification Opportunities for American High and Northern High
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Northern is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Northern High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern High Yield and American High 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 American High Income Municipal are associated (or correlated) with Northern High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern High Yield has no effect on the direction of American High i.e., American High and Northern High go up and down completely randomly.
Pair Corralation between American High and Northern High
If you would invest 732.00 in Northern High Yield on January 18, 2025 and sell it today you would earn a total of 0.00 from holding Northern High Yield or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
American High Income Municipal vs. Northern High Yield
Performance |
| Timeline |
| American High Income |
| Northern High Yield |
Risk-Adjusted Performance
OK
Weak | Strong |
American High and Northern High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High and Northern High
The main advantage of trading using opposite American High and Northern High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High position performs unexpectedly, Northern High 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 High will offset losses from the drop in Northern High's long position.| American High vs. Tax Exempt Bond | American High vs. American High Income Municipal | American High vs. American High Income | American High vs. Bond Fund Of |
| Northern High vs. Northern High Yield | Northern High vs. Northern Tax Exempt Fund | Northern High vs. Northern Intermediate Tax Exempt | Northern High vs. High Yield Municipal Fund |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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