Correlation Between Der International and Northern United

Can any of the company-specific risk be diversified away by investing in both Der International and Northern United 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 Der International and Northern United into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Der International Home and Northern United Publishing, you can compare the effects of market volatilities on Der International and Northern United 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 Der International with a short position of Northern United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Der International and Northern United.

Diversification Opportunities for Der International and Northern United

0.93

Correlation Coefficient

Der International  Northern United

Almost no diversification

The 3 months correlation between Der and Northern is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Der International Home and Northern United Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern United Publ and Der International 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 Der International Home are associated (or correlated) with Northern United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern United Publ has no effect on the direction of Der International i.e., Der International and Northern United go up and down completely randomly.

Pair Corralation between Der International and Northern United

Assuming the 90 days trading horizon Der International Home is expected to under-perform the Northern United. In addition to that, Der International is 1.3 times more volatile than Northern United Publishing. It trades about -0.03 of its total potential returns per unit of risk. Northern United Publishing is currently generating about -0.03 per unit of volatility. If you would invest  691.00  in Northern United Publishing on September 25, 2024 and sell it today you would lose (23.00) from holding Northern United Publishing or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Der International Home  vs.  Northern United Publishing

Der International Home

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Der International Home are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Der International sustained solid returns over the last few months and may actually be approaching a breakup point.

Northern United Publ

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern United Publishing are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Northern United sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Der International and Northern United

The main advantage of trading using opposite Der International and Northern United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Der International position performs unexpectedly, Northern United 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 United will offset losses from the drop in Northern United's long position.

The idea behind Der International Home and Northern United Publishing pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.