Correlation Between Northern High and Federated High
Can any of the company-specific risk be diversified away by investing in both Northern High and Federated 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 Northern High and Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern High Yield and Federated High Yield, you can compare the effects of market volatilities on Northern High and Federated 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 Northern High with a short position of Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern High and Federated High.
Diversification Opportunities for Northern High and Federated High
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Federated is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Northern High Yield and Federated High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Yield and Northern 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 Northern High Yield are associated (or correlated) with Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Yield has no effect on the direction of Northern High i.e., Northern High and Federated High go up and down completely randomly.
Pair Corralation between Northern High and Federated High
Assuming the 90 days horizon Northern High Yield is expected to generate 0.96 times more return on investment than Federated High. However, Northern High Yield is 1.04 times less risky than Federated High. It trades about 0.12 of its potential returns per unit of risk. Federated High Yield is currently generating about 0.1 per unit of risk. 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern High Yield vs. Federated High Yield
Performance |
| Timeline |
| Northern High Yield |
| Federated High Yield |
Northern High and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern High and Federated High
The main advantage of trading using opposite Northern High and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern High position performs unexpectedly, Federated 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 Federated High will offset losses from the drop in Federated High's long position.| Northern High vs. Northern Emerging Markets | Northern High vs. Northern Global Real | Northern High vs. Northern International Equity | Northern High vs. Northern Small Cap |
| Federated High vs. Janus High Yield Fund | Federated High vs. Northeast Investors Trust | Federated High vs. High Yield Fund Investor | Federated High vs. Ab Sustainable Thematic |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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