Correlation Between TINC Comm and Northern Trust

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

By analyzing existing cross correlation between TINC Comm VA and Northern Trust, you can compare the effects of market volatilities on TINC Comm 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 TINC Comm with a short position of Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of TINC Comm and Northern Trust.

Diversification Opportunities for TINC Comm and Northern Trust

-0.9

Correlation Coefficient

TINC Comm  Northern Trust

Pay attention - limited upside

The 3 months correlation between TINC and Northern is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding TINC Comm VA and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust and TINC Comm 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 TINC Comm VA 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 TINC Comm i.e., TINC Comm and Northern Trust go up and down completely randomly.

Pair Corralation between TINC Comm and Northern Trust

Assuming the 90 days horizon TINC Comm is expected to generate 31.49 times less return on investment than Northern Trust. But when comparing it to its historical volatility, TINC Comm VA is 1.49 times less risky than Northern Trust. It trades about 0.0 of its potential returns per unit of risk. Northern Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,636  in Northern Trust on September 23, 2024 and sell it today you would earn a total of  3,014  from holding Northern Trust or generate 45.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

TINC Comm VA  vs.  Northern Trust

TINC Comm VA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TINC Comm VA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Northern Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northern Trust reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TINC Comm and Northern Trust

The main advantage of trading using opposite TINC Comm and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TINC Comm 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.

The idea behind TINC Comm VA and Northern Trust 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.