Correlation Between Cref Inflation-linked and Northern Small
Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked and Northern Small 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 Cref Inflation-linked and Northern Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and Northern Small Cap, you can compare the effects of market volatilities on Cref Inflation-linked and Northern Small 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 Cref Inflation-linked with a short position of Northern Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Northern Small.
Diversification Opportunities for Cref Inflation-linked and Northern Small
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cref and Northern is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Northern Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Small Cap and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Northern Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Small Cap has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Northern Small go up and down completely randomly.
Pair Corralation between Cref Inflation-linked and Northern Small
Assuming the 90 days trading horizon Cref Inflation Linked Bond is expected to generate 0.18 times more return on investment than Northern Small. However, Cref Inflation Linked Bond is 5.6 times less risky than Northern Small. It trades about 0.35 of its potential returns per unit of risk. Northern Small Cap is currently generating about -0.05 per unit of risk. If you would invest 8,485 in Cref Inflation Linked Bond on November 30, 2024 and sell it today you would earn a total of 203.00 from holding Cref Inflation Linked Bond or generate 2.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. Northern Small Cap
Performance |
| Timeline |
| Cref Inflation Linked |
| Northern Small Cap |
Cref Inflation-linked and Northern Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation-linked and Northern Small
The main advantage of trading using opposite Cref Inflation-linked and Northern Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation-linked position performs unexpectedly, Northern Small 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 Small will offset losses from the drop in Northern Small's long position.| Cref Inflation-linked vs. Franklin Natural Resources | Cref Inflation-linked vs. Transamerica Mlp Energy | Cref Inflation-linked vs. Clearbridge Energy Mlp | Cref Inflation-linked vs. Short Oil Gas |
| Northern Small vs. Intal High Relative | Northern Small vs. Aqr Alternative Risk | Northern Small vs. Artisan High Income | Northern Small vs. Transamerica High Yield |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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