Correlation Between Northern Fixed and Northern Global
Can any of the company-specific risk be diversified away by investing in both Northern Fixed and Northern Global 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 Fixed and Northern Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Fixed Income and Northern Global Tactical, you can compare the effects of market volatilities on Northern Fixed and Northern Global 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 Fixed with a short position of Northern Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Fixed and Northern Global.
Diversification Opportunities for Northern Fixed and Northern Global
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Northern is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Northern Fixed Income and Northern Global Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Global Tactical and Northern Fixed 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 Fixed Income are associated (or correlated) with Northern Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Global Tactical has no effect on the direction of Northern Fixed i.e., Northern Fixed and Northern Global go up and down completely randomly.
Pair Corralation between Northern Fixed and Northern Global
Assuming the 90 days horizon Northern Fixed is expected to generate 2.62 times less return on investment than Northern Global. But when comparing it to its historical volatility, Northern Fixed Income is 1.43 times less risky than Northern Global. It trades about 0.05 of its potential returns per unit of risk. Northern Global Tactical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,178 in Northern Global Tactical on November 9, 2024 and sell it today you would earn a total of 145.00 from holding Northern Global Tactical or generate 12.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Fixed Income vs. Northern Global Tactical
Performance |
| Timeline |
| Northern Fixed Income |
| Northern Global Tactical |
Northern Fixed and Northern Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Fixed and Northern Global
The main advantage of trading using opposite Northern Fixed and Northern Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Fixed position performs unexpectedly, Northern Global 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 Northern Global will offset losses from the drop in Northern Global's long position.| Northern Fixed vs. The Hartford Floating | Northern Fixed vs. Gmo High Yield | Northern Fixed vs. Aqr Alternative Risk | Northern Fixed vs. Calamos High Income |
| Northern Global vs. T Rowe Price | Northern Global vs. T Rowe Price | Northern Global vs. Transamerica Funds | Northern Global vs. Midas Fund Midas |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |