Correlation Between NORTHERN and 00108WAF7
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By analyzing existing cross correlation between NORTHERN TRUST PORATION and AEP TEX INC, you can compare the effects of market volatilities on NORTHERN and 00108WAF7 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 NORTHERN with a short position of 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHERN and 00108WAF7.
Diversification Opportunities for NORTHERN and 00108WAF7
Significant diversification
The 3 months correlation between NORTHERN and 00108WAF7 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NORTHERN TRUST PORATION and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC and NORTHERN 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 NORTHERN TRUST PORATION are associated (or correlated) with 00108WAF7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of NORTHERN i.e., NORTHERN and 00108WAF7 go up and down completely randomly.
Pair Corralation between NORTHERN and 00108WAF7
Assuming the 90 days trading horizon NORTHERN is expected to generate 1037.9 times less return on investment than 00108WAF7. But when comparing it to its historical volatility, NORTHERN TRUST PORATION is 118.67 times less risky than 00108WAF7. It trades about 0.01 of its potential returns per unit of risk. AEP TEX INC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,579 in AEP TEX INC on September 12, 2024 and sell it today you would earn a total of 89.00 from holding AEP TEX INC or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 71.02% |
| Values | Daily Returns |
NORTHERN TRUST PORATION vs. AEP TEX INC
Performance |
| Timeline |
| NORTHERN TRUST PORATION |
| AEP TEX INC |
NORTHERN and 00108WAF7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHERN and 00108WAF7
The main advantage of trading using opposite NORTHERN and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHERN position performs unexpectedly, 00108WAF7 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 00108WAF7 will offset losses from the drop in 00108WAF7's long position.| NORTHERN vs. AEP TEX INC | NORTHERN vs. US BANK NATIONAL | NORTHERN vs. Recursion Pharmaceuticals | NORTHERN vs. SoundHound AI |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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