Correlation Between NYSE Composite and Northern Fixed
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Northern Fixed 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 NYSE Composite and Northern Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Northern Fixed Income, you can compare the effects of market volatilities on NYSE Composite and Northern Fixed 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 NYSE Composite with a short position of Northern Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Northern Fixed.
Diversification Opportunities for NYSE Composite and Northern Fixed
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Northern is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Northern Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Fixed Income and NYSE Composite 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 NYSE Composite are associated (or correlated) with Northern Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Fixed Income has no effect on the direction of NYSE Composite i.e., NYSE Composite and Northern Fixed go up and down completely randomly.
Pair Corralation between NYSE Composite and Northern Fixed
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.28 times more return on investment than Northern Fixed. However, NYSE Composite is 2.28 times more volatile than Northern Fixed Income. It trades about 0.19 of its potential returns per unit of risk. Northern Fixed Income is currently generating about -0.15 per unit of risk. If you would invest 1,956,073 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 56,272 from holding NYSE Composite or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Northern Fixed Income
Performance |
| Timeline |
NYSE Composite and Northern Fixed Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Northern Fixed Income
Pair trading matchups for Northern Fixed
Pair Trading with NYSE Composite and Northern Fixed
The main advantage of trading using opposite NYSE Composite and Northern Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Northern Fixed 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 Fixed will offset losses from the drop in Northern Fixed's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Northern Fixed vs. Northern Bond Index | Northern Fixed vs. Northern E Bond | Northern Fixed vs. Northern Arizona Tax Exempt | Northern Fixed vs. Northern Emerging Markets |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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