Correlation Between Northern Data and United Breweries
Can any of the company-specific risk be diversified away by investing in both Northern Data and United Breweries 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 Northern Data and United Breweries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Data AG and United Breweries Co, you can compare the effects of market volatilities on Northern Data and United Breweries 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 Northern Data with a short position of United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and United Breweries.
Diversification Opportunities for Northern Data and United Breweries
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and United is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries and Northern Data 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 Northern Data AG are associated (or correlated) with United Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Breweries has no effect on the direction of Northern Data i.e., Northern Data and United Breweries go up and down completely randomly.
Pair Corralation between Northern Data and United Breweries
Assuming the 90 days trading horizon Northern Data is expected to generate 1.87 times less return on investment than United Breweries. In addition to that, Northern Data is 2.38 times more volatile than United Breweries Co. It trades about 0.03 of its total potential returns per unit of risk. United Breweries Co is currently generating about 0.13 per unit of volatility. If you would invest 1,070 in United Breweries Co on October 30, 2024 and sell it today you would earn a total of 40.00 from holding United Breweries Co or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Northern Data AG vs. United Breweries Co
Performance |
| Timeline |
| Northern Data AG |
| United Breweries |
Northern Data and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Data and United Breweries
The main advantage of trading using opposite Northern Data and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data position performs unexpectedly, United Breweries 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 United Breweries will offset losses from the drop in United Breweries' long position.| Northern Data vs. Coffee Holding Co | Northern Data vs. KENEDIX OFFICE INV | Northern Data vs. NURAN WIRELESS INC | Northern Data vs. FIREWEED METALS P |
| United Breweries vs. BORR DRILLING NEW | United Breweries vs. Fortescue Metals Group | United Breweries vs. ADRIATIC METALS LS 013355 | United Breweries vs. Air Transport Services |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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