Correlation Between Northern Small and Multi-manager Global
Can any of the company-specific risk be diversified away by investing in both Northern Small and Multi-manager 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 Small and Multi-manager Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Small Cap and Multi Manager Global Real, you can compare the effects of market volatilities on Northern Small and Multi-manager 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 Small with a short position of Multi-manager Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Small and Multi-manager Global.
Diversification Opportunities for Northern Small and Multi-manager Global
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northern and Multi-manager is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Northern Small Cap 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 Small 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 Small Cap are associated (or correlated) with Multi-manager Global. 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 Small i.e., Northern Small and Multi-manager Global go up and down completely randomly.
Pair Corralation between Northern Small and Multi-manager Global
Assuming the 90 days horizon Northern Small Cap is expected to generate 1.44 times more return on investment than Multi-manager Global. However, Northern Small is 1.44 times more volatile than Multi Manager Global Real. It trades about 0.08 of its potential returns per unit of risk. Multi Manager Global Real is currently generating about 0.08 per unit of risk. If you would invest 1,709 in Northern Small Cap on September 1, 2024 and sell it today you would earn a total of 538.00 from holding Northern Small Cap or generate 31.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Northern Small Cap vs. Multi Manager Global Real
Performance |
| Timeline |
| Northern Small Cap |
| Multi Manager Global |
Northern Small and Multi-manager Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Small and Multi-manager Global
The main advantage of trading using opposite Northern Small and Multi-manager Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Small position performs unexpectedly, Multi-manager 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 Multi-manager Global will offset losses from the drop in Multi-manager Global's long position.| Northern Small vs. American Beacon Large | Northern Small vs. Harbor International Fund | Northern Small vs. Credit Suisse Modity | Northern Small vs. Metropolitan West Total |
| Multi-manager Global vs. American Funds Retirement | Multi-manager Global vs. Wisdomtree Siegel Moderate | Multi-manager Global vs. Pro Blend Moderate Term | Multi-manager Global vs. Qs Moderate Growth |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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