Correlation Between High-yield Fund and Northern High
Can any of the company-specific risk be diversified away by investing in both High-yield Fund 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 High-yield Fund and Northern High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund Investor and Northern High Yield, you can compare the effects of market volatilities on High-yield Fund 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 High-yield Fund with a short position of Northern High. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Fund and Northern High.
Diversification Opportunities for High-yield Fund and Northern High
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between High-yield and Northern is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund Investor 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 High-yield Fund 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 High Yield Fund Investor 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 High-yield Fund i.e., High-yield Fund and Northern High go up and down completely randomly.
Pair Corralation between High-yield Fund and Northern High
Assuming the 90 days horizon High Yield Fund Investor is expected to generate 1.15 times more return on investment than Northern High. However, High-yield Fund is 1.15 times more volatile than Northern High Yield. It trades about 0.13 of its potential returns per unit of risk. Northern High Yield is currently generating about 0.13 per unit of risk. If you would invest 508.00 in High Yield Fund Investor on November 3, 2024 and sell it today you would earn a total of 3.00 from holding High Yield Fund Investor or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund Investor vs. Northern High Yield
Performance |
| Timeline |
| High Yield Fund |
| Northern High Yield |
High-yield Fund and Northern High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Fund and Northern High
The main advantage of trading using opposite High-yield Fund and Northern High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Fund 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.| High-yield Fund vs. High Yield Municipal Fund | High-yield Fund vs. Diversified Bond Fund | High-yield Fund vs. Ginnie Mae Fund | High-yield Fund vs. Utilities Fund Investor |
| Northern High vs. Northern Emerging Markets | Northern High vs. Northern Global Real | Northern High vs. Northern International Equity | Northern High vs. Northern Small Cap |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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