Correlation Between Digimarc and NORTHERN

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

By analyzing existing cross correlation between Digimarc and NORTHERN TRUST PORATION, you can compare the effects of market volatilities on Digimarc and NORTHERN 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 Digimarc with a short position of NORTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and NORTHERN.

Diversification Opportunities for Digimarc and NORTHERN

-0.72

Correlation Coefficient

Digimarc  NORTHERN

Pay attention - limited upside

The 3 months correlation between Digimarc and NORTHERN is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and NORTHERN TRUST PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHERN TRUST PORATION and Digimarc 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 Digimarc are associated (or correlated) with NORTHERN. 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 PORATION has no effect on the direction of Digimarc i.e., Digimarc and NORTHERN go up and down completely randomly.

Pair Corralation between Digimarc and NORTHERN

Given the investment horizon of 90 days Digimarc is expected to generate 2.94 times more return on investment than NORTHERN. However, Digimarc is 2.94 times more volatile than NORTHERN TRUST PORATION. It trades about 0.21 of its potential returns per unit of risk. NORTHERN TRUST PORATION is currently generating about -0.27 per unit of risk. If you would invest  3,389  in Digimarc on September 29, 2024 and sell it today you would earn a total of  411.00  from holding Digimarc or generate 12.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Digimarc  vs.  NORTHERN TRUST PORATION

Digimarc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digimarc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Digimarc exhibited solid returns over the last few months and may actually be approaching a breakup point.

NORTHERN TRUST PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORTHERN TRUST PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NORTHERN TRUST PORATION investors.

Pair Trading with Digimarc and NORTHERN

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

The idea behind Digimarc and NORTHERN TRUST PORATION 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.