Correlation Between Ashland Global and Northern Technologies
Can any of the company-specific risk be diversified away by investing in both Ashland Global and Northern Technologies 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 Ashland Global and Northern Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashland Global Holdings and Northern Technologies, you can compare the effects of market volatilities on Ashland Global and Northern Technologies 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 Ashland Global with a short position of Northern Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashland Global and Northern Technologies.
Diversification Opportunities for Ashland Global and Northern Technologies
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashland and Northern is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and Northern Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Technologies and Ashland Global 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 Ashland Global Holdings are associated (or correlated) with Northern Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Technologies has no effect on the direction of Ashland Global i.e., Ashland Global and Northern Technologies go up and down completely randomly.
Pair Corralation between Ashland Global and Northern Technologies
Considering the 90-day investment horizon Ashland Global Holdings is expected to under-perform the Northern Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Ashland Global Holdings is 1.42 times less risky than Northern Technologies. The stock trades about -0.14 of its potential returns per unit of risk. The Northern Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,245 in Northern Technologies on August 27, 2024 and sell it today you would earn a total of 112.00 from holding Northern Technologies or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashland Global Holdings vs. Northern Technologies
Performance |
| Timeline |
| Ashland Global Holdings |
| Northern Technologies |
Ashland Global and Northern Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashland Global and Northern Technologies
The main advantage of trading using opposite Ashland Global and Northern Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashland Global position performs unexpectedly, Northern Technologies 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 Technologies will offset losses from the drop in Northern Technologies' long position.| Ashland Global vs. H B Fuller | Ashland Global vs. Element Solutions | Ashland Global vs. Balchem | Ashland Global vs. Avantor |
| Northern Technologies vs. Innospec | Northern Technologies vs. H B Fuller | Northern Technologies vs. Quaker Chemical | Northern Technologies vs. Minerals Technologies |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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