Correlation Between Stifel Financial and Northern Trust
Can any of the company-specific risk be diversified away by investing in both Stifel Financial and Northern Trust 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 Stifel Financial and Northern Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stifel Financial and Northern Trust, you can compare the effects of market volatilities on Stifel Financial and Northern Trust 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 Stifel Financial with a short position of Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stifel Financial and Northern Trust.
Diversification Opportunities for Stifel Financial and Northern Trust
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Stifel and Northern is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust and Stifel Financial 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 Stifel Financial are associated (or correlated) with Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of Stifel Financial i.e., Stifel Financial and Northern Trust go up and down completely randomly.
Pair Corralation between Stifel Financial and Northern Trust
Allowing for the 90-day total investment horizon Stifel Financial is expected to generate 0.95 times more return on investment than Northern Trust. However, Stifel Financial is 1.05 times less risky than Northern Trust. It trades about 0.09 of its potential returns per unit of risk. Northern Trust is currently generating about 0.04 per unit of risk. If you would invest 5,880 in Stifel Financial on August 27, 2024 and sell it today you would earn a total of 5,742 from holding Stifel Financial or generate 97.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stifel Financial vs. Northern Trust
Performance |
| Timeline |
| Stifel Financial |
| Northern Trust |
Stifel Financial and Northern Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stifel Financial and Northern Trust
The main advantage of trading using opposite Stifel Financial and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stifel Financial position performs unexpectedly, Northern Trust 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 Trust will offset losses from the drop in Northern Trust's long position.| Stifel Financial vs. Raymond James Financial | Stifel Financial vs. Evercore Partners | Stifel Financial vs. Selective Insurance Group | Stifel Financial vs. Reinsurance Group of |
| Northern Trust vs. Bank of New | Northern Trust vs. Invesco Plc | Northern Trust vs. Franklin Resources | Northern Trust vs. T Rowe Price |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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