Correlation Between Northern Data and ENDESA ADR/
Can any of the company-specific risk be diversified away by investing in both Northern Data and ENDESA ADR/ 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 ENDESA ADR/ 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 ENDESA ADR 12, you can compare the effects of market volatilities on Northern Data and ENDESA ADR/ 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 ENDESA ADR/. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and ENDESA ADR/.
Diversification Opportunities for Northern Data and ENDESA ADR/
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and ENDESA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG and ENDESA ADR 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDESA ADR 12 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 ENDESA ADR/. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDESA ADR 12 has no effect on the direction of Northern Data i.e., Northern Data and ENDESA ADR/ go up and down completely randomly.
Pair Corralation between Northern Data and ENDESA ADR/
Assuming the 90 days trading horizon Northern Data AG is expected to generate 3.07 times more return on investment than ENDESA ADR/. However, Northern Data is 3.07 times more volatile than ENDESA ADR 12. It trades about 0.2 of its potential returns per unit of risk. ENDESA ADR 12 is currently generating about 0.14 per unit of risk. If you would invest 1,948 in Northern Data AG on November 3, 2024 and sell it today you would earn a total of 2,537 from holding Northern Data AG or generate 130.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Northern Data AG vs. ENDESA ADR 12
Performance |
| Timeline |
| Northern Data AG |
| ENDESA ADR 12 |
Northern Data and ENDESA ADR/ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Data and ENDESA ADR/
The main advantage of trading using opposite Northern Data and ENDESA ADR/ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data position performs unexpectedly, ENDESA ADR/ 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 ENDESA ADR/ will offset losses from the drop in ENDESA ADR/'s long position.| Northern Data vs. ANTA SPORTS PRODUCT | Northern Data vs. SPORT LISBOA E | Northern Data vs. BJs Restaurants | Northern Data vs. Tower Semiconductor |
| ENDESA ADR/ vs. Sumitomo Rubber Industries | ENDESA ADR/ vs. Heidelberg Materials AG | ENDESA ADR/ vs. Discover Financial Services | ENDESA ADR/ vs. CENTURIA OFFICE REIT |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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