Correlation Between Northern High and Ab Sustainable
Can any of the company-specific risk be diversified away by investing in both Northern High and Ab Sustainable 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 Ab Sustainable 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 Ab Sustainable Thematic, you can compare the effects of market volatilities on Northern High and Ab Sustainable 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 Ab Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern High and Ab Sustainable.
Diversification Opportunities for Northern High and Ab Sustainable
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and STHYX is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Northern High Yield and Ab Sustainable Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Sustainable Thematic 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 Ab Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Sustainable Thematic has no effect on the direction of Northern High i.e., Northern High and Ab Sustainable go up and down completely randomly.
Pair Corralation between Northern High and Ab Sustainable
Assuming the 90 days horizon Northern High Yield is expected to generate 0.65 times more return on investment than Ab Sustainable. However, Northern High Yield is 1.54 times less risky than Ab Sustainable. It trades about 0.13 of its potential returns per unit of risk. Ab Sustainable Thematic is currently generating about 0.04 per unit of risk. If you would invest 606.00 in Northern High Yield on November 3, 2024 and sell it today you would earn a total of 3.00 from holding Northern High Yield or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern High Yield vs. Ab Sustainable Thematic
Performance |
| Timeline |
| Northern High Yield |
| Ab Sustainable Thematic |
Northern High and Ab Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern High and Ab Sustainable
The main advantage of trading using opposite Northern High and Ab Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern High position performs unexpectedly, Ab Sustainable 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 Ab Sustainable will offset losses from the drop in Ab Sustainable'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 |
| Ab Sustainable vs. Morgan Stanley Emerging | Ab Sustainable vs. Barings Emerging Markets | Ab Sustainable vs. The Hartford Emerging | Ab Sustainable vs. Angel Oak Multi Strategy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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