Correlation Between Northern Trust and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Northern Trust and SLR Investment 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 SLR Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Trust and SLR Investment Corp, you can compare the effects of market volatilities on Northern Trust and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Trust and SLR Investment.
Diversification Opportunities for Northern Trust and SLR Investment
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and SLR is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Northern Trust and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Northern Trust i.e., Northern Trust and SLR Investment go up and down completely randomly.
Pair Corralation between Northern Trust and SLR Investment
Assuming the 90 days horizon Northern Trust is expected to generate 0.84 times more return on investment than SLR Investment. However, Northern Trust is 1.19 times less risky than SLR Investment. It trades about 0.36 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.22 per unit of risk. If you would invest 9,300 in Northern Trust on August 28, 2024 and sell it today you would earn a total of 1,200 from holding Northern Trust or generate 12.9% 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. SLR Investment Corp
Performance |
| Timeline |
| Northern Trust |
| SLR Investment Corp |
Northern Trust and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Trust and SLR Investment
The main advantage of trading using opposite Northern Trust and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Trust position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Northern Trust vs. The Bank of | Northern Trust vs. Superior Plus Corp | Northern Trust vs. NMI Holdings | Northern Trust vs. Origin Agritech |
| SLR Investment vs. The Bank of | SLR Investment vs. Superior Plus Corp | SLR Investment vs. NMI Holdings | SLR Investment vs. Origin Agritech |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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