Correlation Between Northern International and Multi-manager High
Can any of the company-specific risk be diversified away by investing in both Northern International and Multi-manager 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 International and Multi-manager High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern International Equity and Multi Manager High Yield, you can compare the effects of market volatilities on Northern International and Multi-manager 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 International with a short position of Multi-manager High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern International and Multi-manager High.
Diversification Opportunities for Northern International and Multi-manager High
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northern and Multi-manager is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Northern International Equity and Multi Manager High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager High and Northern International 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 International Equity are associated (or correlated) with Multi-manager High. 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 High has no effect on the direction of Northern International i.e., Northern International and Multi-manager High go up and down completely randomly.
Pair Corralation between Northern International and Multi-manager High
Assuming the 90 days horizon Northern International Equity is expected to generate 5.97 times more return on investment than Multi-manager High. However, Northern International is 5.97 times more volatile than Multi Manager High Yield. It trades about 0.06 of its potential returns per unit of risk. Multi Manager High Yield is currently generating about 0.13 per unit of risk. If you would invest 1,049 in Northern International Equity on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Northern International Equity or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Northern International Equity vs. Multi Manager High Yield
Performance |
| Timeline |
| Northern International |
| Multi Manager High |
Northern International and Multi-manager High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern International and Multi-manager High
The main advantage of trading using opposite Northern International and Multi-manager High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern International position performs unexpectedly, Multi-manager 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 Multi-manager High will offset losses from the drop in Multi-manager High's long position.| Northern International vs. Federated Institutional High | Northern International vs. Multi Manager High Yield | Northern International vs. Pace High Yield | Northern International vs. Mesirow Financial High |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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