Correlation Between Buffalo High and Northern High
Can any of the company-specific risk be diversified away by investing in both Buffalo 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 Buffalo 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 Buffalo High Yield and Northern High Yield, you can compare the effects of market volatilities on Buffalo 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 Buffalo High with a short position of Northern High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo High and Northern High.
Diversification Opportunities for Buffalo High and Northern High
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Buffalo and Northern is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo High Yield 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 Buffalo 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 Buffalo High Yield 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 Buffalo High i.e., Buffalo High and Northern High go up and down completely randomly.
Pair Corralation between Buffalo High and Northern High
Assuming the 90 days horizon Buffalo High is expected to generate 1.01 times less return on investment than Northern High. But when comparing it to its historical volatility, Buffalo High Yield is 1.97 times less risky than Northern High. It trades about 0.24 of its potential returns per unit of risk. Northern High Yield is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 507.00 in Northern High Yield on September 3, 2024 and sell it today you would earn a total of 104.00 from holding Northern High Yield or generate 20.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buffalo High Yield vs. Northern High Yield
Performance |
| Timeline |
| Buffalo High Yield |
| Northern High Yield |
Buffalo High and Northern High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buffalo High and Northern High
The main advantage of trading using opposite Buffalo High and Northern High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo 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.| Buffalo High vs. Buffalo Flexible Income | Buffalo High vs. Buffalo Growth Fund | Buffalo High vs. Buffalo Large Cap | Buffalo High vs. Buffalo Mid Cap |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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