Correlation Between Northern Trust and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both Northern Trust and LIFENET INSURANCE 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 Trust and LIFENET INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Trust and LIFENET INSURANCE CO, you can compare the effects of market volatilities on Northern Trust and LIFENET INSURANCE 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 Trust with a short position of LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Trust and LIFENET INSURANCE.
Diversification Opportunities for Northern Trust and LIFENET INSURANCE
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and LIFENET is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Northern Trust and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE and Northern Trust 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 Trust are associated (or correlated) with LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of Northern Trust i.e., Northern Trust and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between Northern Trust and LIFENET INSURANCE
Assuming the 90 days horizon Northern Trust is expected to generate 1.68 times less return on investment than LIFENET INSURANCE. But when comparing it to its historical volatility, Northern Trust is 1.49 times less risky than LIFENET INSURANCE. It trades about 0.03 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 820.00 in LIFENET INSURANCE CO on September 26, 2024 and sell it today you would earn a total of 300.00 from holding LIFENET INSURANCE CO or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Trust vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| Northern Trust |
| LIFENET INSURANCE |
Northern Trust and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Trust and LIFENET INSURANCE
The main advantage of trading using opposite Northern Trust and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Trust position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.| Northern Trust vs. Blackstone Group | Northern Trust vs. The Bank of | Northern Trust vs. Ameriprise Financial | Northern Trust vs. State Street |
| LIFENET INSURANCE vs. Prudential plc | LIFENET INSURANCE vs. Wstenrot Wrttembergische AG | LIFENET INSURANCE vs. Northern Trust | LIFENET INSURANCE vs. ADRIATIC METALS LS 013355 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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