Correlation Between Northern Fixed and Northern E
Can any of the company-specific risk be diversified away by investing in both Northern Fixed and Northern E 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 E 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 E Bond, you can compare the effects of market volatilities on Northern Fixed and Northern E 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 E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Fixed and Northern E.
Diversification Opportunities for Northern Fixed and Northern E
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Northern is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Northern Fixed Income and Northern E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern E Bond 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 E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern E Bond has no effect on the direction of Northern Fixed i.e., Northern Fixed and Northern E go up and down completely randomly.
Pair Corralation between Northern Fixed and Northern E
Assuming the 90 days horizon Northern Fixed Income is expected to generate 0.95 times more return on investment than Northern E. However, Northern Fixed Income is 1.06 times less risky than Northern E. It trades about 0.02 of its potential returns per unit of risk. Northern E Bond is currently generating about 0.02 per unit of risk. If you would invest 870.00 in Northern Fixed Income on August 25, 2024 and sell it today you would earn a total of 15.00 from holding Northern Fixed Income or generate 1.72% 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 E Bond
Performance |
| Timeline |
| Northern Fixed Income |
| Northern E Bond |
Northern Fixed and Northern E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Fixed and Northern E
The main advantage of trading using opposite Northern Fixed and Northern E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Fixed position performs unexpectedly, Northern E 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 E will offset losses from the drop in Northern E's long position.| Northern Fixed vs. Northern Bond Index | Northern Fixed vs. Northern E Bond | Northern Fixed vs. Northern Arizona Tax Exempt | Northern Fixed vs. Northern Emerging Markets |
| Northern E vs. William Blair Large | Northern E vs. Qs Large Cap | Northern E vs. Nuveen Winslow Large Cap | Northern E vs. Morningstar Unconstrained Allocation |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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