Correlation Between Northern Large and Northern High
Can any of the company-specific risk be diversified away by investing in both Northern Large and Northern 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 Large and Northern High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Large Cap and Northern High Yield, you can compare the effects of market volatilities on Northern Large and Northern 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 Large with a short position of Northern High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Large and Northern High.
Diversification Opportunities for Northern Large and Northern High
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Northern and Northern is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Northern Large Cap and Northern High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern High Yield and Northern Large 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 Large Cap are associated (or correlated) with Northern High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern High Yield has no effect on the direction of Northern Large i.e., Northern Large and Northern High go up and down completely randomly.
Pair Corralation between Northern Large and Northern High
Assuming the 90 days horizon Northern Large Cap is expected to generate 2.88 times more return on investment than Northern High. However, Northern Large is 2.88 times more volatile than Northern High Yield. It trades about 0.06 of its potential returns per unit of risk. Northern High Yield is currently generating about 0.16 per unit of risk. If you would invest 1,683 in Northern Large Cap on December 6, 2024 and sell it today you would earn a total of 396.00 from holding Northern Large Cap or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Large Cap vs. Northern High Yield
Performance |
| Timeline |
| Northern Large Cap |
| Northern High Yield |
Northern Large and Northern High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Large and Northern High
The main advantage of trading using opposite Northern Large and Northern High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Large position performs unexpectedly, Northern 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 Northern High will offset losses from the drop in Northern High's long position.| Northern Large vs. Bbh Intermediate Municipal | Northern Large vs. Pace Municipal Fixed | Northern Large vs. Ab Municipal Bond | Northern Large vs. Legg Mason Partners |
| Northern High vs. Northern Emerging Markets | Northern High vs. Northern Global Real | Northern High vs. Northern International Equity | Northern High vs. Northern Small Cap |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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