Correlation Between NYSE Composite and Northern International
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Northern International 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 International 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 International Equity, you can compare the effects of market volatilities on NYSE Composite and Northern International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Northern International.
Diversification Opportunities for NYSE Composite and Northern International
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Northern is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Northern International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern International has no effect on the direction of NYSE Composite i.e., NYSE Composite and Northern International go up and down completely randomly.
Pair Corralation between NYSE Composite and Northern International
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.8 times more return on investment than Northern International. However, NYSE Composite is 1.26 times less risky than Northern International. It trades about 0.12 of its potential returns per unit of risk. Northern International Equity is currently generating about -0.21 per unit of risk. If you would invest 1,950,655 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 61,690 from holding NYSE Composite or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Northern International Equity
Performance |
| Timeline |
NYSE Composite and Northern International Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Northern International Equity
Pair trading matchups for Northern International
Pair Trading with NYSE Composite and Northern International
The main advantage of trading using opposite NYSE Composite and Northern International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Northern International 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 International will offset losses from the drop in Northern International'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 International vs. Northern Bond Index | Northern International vs. Northern E Bond | Northern International vs. Northern Arizona Tax Exempt | Northern International 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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