Correlation Between Northern Data and Mid-America Apartment
Can any of the company-specific risk be diversified away by investing in both Northern Data and Mid-America Apartment 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 Mid-America Apartment 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 Mid America Apartment Communities, you can compare the effects of market volatilities on Northern Data and Mid-America Apartment 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 Mid-America Apartment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and Mid-America Apartment.
Diversification Opportunities for Northern Data and Mid-America Apartment
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and Mid-America is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG and Mid America Apartment Communit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid America Apartment 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 Mid-America Apartment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid America Apartment has no effect on the direction of Northern Data i.e., Northern Data and Mid-America Apartment go up and down completely randomly.
Pair Corralation between Northern Data and Mid-America Apartment
Assuming the 90 days trading horizon Northern Data AG is expected to generate 3.21 times more return on investment than Mid-America Apartment. However, Northern Data is 3.21 times more volatile than Mid America Apartment Communities. It trades about 0.3 of its potential returns per unit of risk. Mid America Apartment Communities is currently generating about -0.07 per unit of risk. If you would invest 3,215 in Northern Data AG on October 11, 2024 and sell it today you would earn a total of 1,730 from holding Northern Data AG or generate 53.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
Northern Data AG vs. Mid America Apartment Communit
Performance |
| Timeline |
| Northern Data AG |
| Mid America Apartment |
Northern Data and Mid-America Apartment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Data and Mid-America Apartment
The main advantage of trading using opposite Northern Data and Mid-America Apartment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data position performs unexpectedly, Mid-America Apartment 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 Mid-America Apartment will offset losses from the drop in Mid-America Apartment's long position.| Northern Data vs. RELIANCE STEEL AL | Northern Data vs. NEW MILLENNIUM IRON | Northern Data vs. VELA TECHNOLPLC LS 0001 | Northern Data vs. STEEL DYNAMICS |
| Mid-America Apartment vs. GALENA MINING LTD | Mid-America Apartment vs. MCEWEN MINING INC | Mid-America Apartment vs. Northern Data AG | Mid-America Apartment vs. Alliance Data Systems |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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