Correlation Between Oil Dri and Northern Technologies
Can any of the company-specific risk be diversified away by investing in both Oil Dri and Northern Technologies 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 Oil Dri and Northern Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Dri and Northern Technologies, you can compare the effects of market volatilities on Oil Dri and Northern Technologies 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 Oil Dri with a short position of Northern Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Dri and Northern Technologies.
Diversification Opportunities for Oil Dri and Northern Technologies
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Oil and Northern is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Oil Dri and Northern Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Technologies and Oil Dri 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 Oil Dri are associated (or correlated) with Northern Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Technologies has no effect on the direction of Oil Dri i.e., Oil Dri and Northern Technologies go up and down completely randomly.
Pair Corralation between Oil Dri and Northern Technologies
Considering the 90-day investment horizon Oil Dri is expected to generate 0.94 times more return on investment than Northern Technologies. However, Oil Dri is 1.06 times less risky than Northern Technologies. It trades about 0.08 of its potential returns per unit of risk. Northern Technologies is currently generating about 0.01 per unit of risk. If you would invest 1,821 in Oil Dri on November 2, 2024 and sell it today you would earn a total of 2,421 from holding Oil Dri or generate 132.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Oil Dri vs. Northern Technologies
Performance |
| Timeline |
| Oil Dri |
| Northern Technologies |
Oil Dri and Northern Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Dri and Northern Technologies
The main advantage of trading using opposite Oil Dri and Northern Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Dri position performs unexpectedly, Northern Technologies 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 Technologies will offset losses from the drop in Northern Technologies' long position.| Oil Dri vs. H B Fuller | Oil Dri vs. Minerals Technologies | Oil Dri vs. Quaker Chemical | Oil Dri vs. Sensient Technologies |
| Northern Technologies vs. Innospec | Northern Technologies vs. H B Fuller | Northern Technologies vs. Quaker Chemical | Northern Technologies vs. Minerals Technologies |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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