Correlation Between Northern Emerging and Multi Manager
Can any of the company-specific risk be diversified away by investing in both Northern Emerging and Multi Manager 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 Emerging and Multi Manager into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Emerging Markets and Multi Manager Global Real, you can compare the effects of market volatilities on Northern Emerging and Multi Manager 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 Emerging with a short position of Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Emerging and Multi Manager.
Diversification Opportunities for Northern Emerging and Multi Manager
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Northern and Multi is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Northern Emerging Markets and Multi Manager Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Global and Northern Emerging 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 Emerging Markets are associated (or correlated) with Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Global has no effect on the direction of Northern Emerging i.e., Northern Emerging and Multi Manager go up and down completely randomly.
Pair Corralation between Northern Emerging and Multi Manager
Assuming the 90 days horizon Northern Emerging Markets is expected to generate 0.91 times more return on investment than Multi Manager. However, Northern Emerging Markets is 1.1 times less risky than Multi Manager. It trades about 0.05 of its potential returns per unit of risk. Multi Manager Global Real is currently generating about 0.03 per unit of risk. If you would invest 978.00 in Northern Emerging Markets on September 13, 2024 and sell it today you would earn a total of 209.00 from holding Northern Emerging Markets or generate 21.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Emerging Markets vs. Multi Manager Global Real
Performance |
| Timeline |
| Northern Emerging Markets |
| Multi Manager Global |
Northern Emerging and Multi Manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Emerging and Multi Manager
The main advantage of trading using opposite Northern Emerging and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Emerging position performs unexpectedly, Multi Manager 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 Multi Manager will offset losses from the drop in Multi Manager's long position.| Northern Emerging vs. Northern Bond Index | Northern Emerging vs. Northern E Bond | Northern Emerging vs. Northern Arizona Tax Exempt | Northern Emerging vs. Northern Fixed Income |
| Multi Manager vs. Northern Bond Index | Multi Manager vs. Northern E Bond | Multi Manager vs. Northern Arizona Tax Exempt | Multi Manager vs. Northern Emerging Markets |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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