Correlation Between Inverse High and Northern Funds
Can any of the company-specific risk be diversified away by investing in both Inverse High and Northern Funds 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 Inverse High and Northern Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse High Yield and Northern Funds , you can compare the effects of market volatilities on Inverse High and Northern Funds 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 Inverse High with a short position of Northern Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse High and Northern Funds.
Diversification Opportunities for Inverse High and Northern Funds
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inverse and Northern is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Inverse High Yield and Northern Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Funds and Inverse High 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 Inverse High Yield are associated (or correlated) with Northern Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Funds has no effect on the direction of Inverse High i.e., Inverse High and Northern Funds go up and down completely randomly.
Pair Corralation between Inverse High and Northern Funds
Assuming the 90 days horizon Inverse High Yield is expected to under-perform the Northern Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, Inverse High Yield is 2.46 times less risky than Northern Funds. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Northern Funds is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Northern Funds on September 14, 2024 and sell it today you would earn a total of 9.00 from holding Northern Funds or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.21% |
| Values | Daily Returns |
Inverse High Yield vs. Northern Funds
Performance |
| Timeline |
| Inverse High Yield |
| Northern Funds |
Inverse High and Northern Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse High and Northern Funds
The main advantage of trading using opposite Inverse High and Northern Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse High position performs unexpectedly, Northern Funds 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 Funds will offset losses from the drop in Northern Funds' long position.| Inverse High vs. Basic Materials Fund | Inverse High vs. Basic Materials Fund | Inverse High vs. Banking Fund Class | Inverse High vs. Basic Materials Fund |
| Northern Funds vs. Inverse High Yield | Northern Funds vs. Prudential High Yield | Northern Funds vs. City National Rochdale | Northern Funds vs. Jpmorgan 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |