Correlation Between North American and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both North American and Stone Harbor 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 North American and Stone Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and Stone Harbor Emerging, you can compare the effects of market volatilities on North American and Stone Harbor 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 North American with a short position of Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Stone Harbor.
Diversification Opportunities for North American and Stone Harbor
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between North and Stone is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging and North American 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 North American Financial are associated (or correlated) with Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of North American i.e., North American and Stone Harbor go up and down completely randomly.
Pair Corralation between North American and Stone Harbor
Assuming the 90 days horizon North American Financial is expected to generate 6.81 times more return on investment than Stone Harbor. However, North American is 6.81 times more volatile than Stone Harbor Emerging. It trades about 0.07 of its potential returns per unit of risk. Stone Harbor Emerging is currently generating about 0.05 per unit of risk. If you would invest 306.00 in North American Financial on November 2, 2024 and sell it today you would earn a total of 211.00 from holding North American Financial or generate 68.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 68.83% |
| Values | Daily Returns |
North American Financial vs. Stone Harbor Emerging
Performance |
| Timeline |
| North American Financial |
| Stone Harbor Emerging |
North American and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Stone Harbor
The main advantage of trading using opposite North American and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.| North American vs. Financial 15 Split | North American vs. Clough Global Ef | North American vs. Morgan Stanley India | North American vs. SEI Investments |
| Stone Harbor vs. Virtus Global Multi | Stone Harbor vs. Aberdeen Global IF | Stone Harbor vs. Cushing Mlp Total | Stone Harbor vs. Aberdeen Asia Pacific If |
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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