Correlation Between Northern Trust and Oaktree Capital
Can any of the company-specific risk be diversified away by investing in both Northern Trust and Oaktree Capital 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 Oaktree Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Trust and Oaktree Capital Group, you can compare the effects of market volatilities on Northern Trust and Oaktree Capital 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 Oaktree Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Trust and Oaktree Capital.
Diversification Opportunities for Northern Trust and Oaktree Capital
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and Oaktree is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Northern Trust and Oaktree Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree Capital Group 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 Oaktree Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree Capital Group has no effect on the direction of Northern Trust i.e., Northern Trust and Oaktree Capital go up and down completely randomly.
Pair Corralation between Northern Trust and Oaktree Capital
Assuming the 90 days horizon Northern Trust is expected to generate 20.3 times less return on investment than Oaktree Capital. In addition to that, Northern Trust is 1.05 times more volatile than Oaktree Capital Group. It trades about 0.0 of its total potential returns per unit of risk. Oaktree Capital Group is currently generating about 0.04 per unit of volatility. If you would invest 2,306 in Oaktree Capital Group on August 31, 2024 and sell it today you would earn a total of 53.00 from holding Oaktree Capital Group or generate 2.3% 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. Oaktree Capital Group
Performance |
| Timeline |
| Northern Trust |
| Oaktree Capital Group |
Northern Trust and Oaktree Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Trust and Oaktree Capital
The main advantage of trading using opposite Northern Trust and Oaktree Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Trust position performs unexpectedly, Oaktree Capital 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 Oaktree Capital will offset losses from the drop in Oaktree Capital's long position.| Northern Trust vs. Fifth Third Bancorp | Northern Trust vs. First Citizens BancShares | Northern Trust vs. Arch Capital Group | Northern Trust vs. Merchants Bancorp |
| Oaktree Capital vs. Oaktree Capital Group | Oaktree Capital vs. RenaissanceRe Holdings | Oaktree Capital vs. State Street | Oaktree Capital vs. MetLife Preferred Stock |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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