Correlation Between North American and 2028 Investment

Can any of the company-specific risk be diversified away by investing in both North American and 2028 Investment 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 North American and 2028 Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between North American Financial and 2028 Investment Grade, you can compare the effects of market volatilities on North American and 2028 Investment 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 North American with a short position of 2028 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and 2028 Investment.

Diversification Opportunities for North American and 2028 Investment

-0.17

Correlation Coefficient

North American  2028 Investment

Good diversification

The 3 months correlation between North and 2028 is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and 2028 Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2028 Investment Grade and North American 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 North American Financial are associated (or correlated) with 2028 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2028 Investment Grade has no effect on the direction of North American i.e., North American and 2028 Investment go up and down completely randomly.

Pair Corralation between North American and 2028 Investment

Assuming the 90 days trading horizon North American Financial is expected to under-perform the 2028 Investment. But the stock apears to be less risky and, when comparing its historical volatility, North American Financial is 2.17 times less risky than 2028 Investment. The stock trades about -0.07 of its potential returns per unit of risk. The 2028 Investment Grade is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,020  in 2028 Investment Grade on December 22, 2024 and sell it today you would earn a total of  33.00  from holding 2028 Investment Grade or generate 3.24% return on investment over 90 days.

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

North American Financial  vs.  2028 Investment Grade

North American Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days North American Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

2028 Investment Grade

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 2028 Investment Grade are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, 2028 Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with North American and 2028 Investment

The main advantage of trading using opposite North American and 2028 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, 2028 Investment 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 2028 Investment will offset losses from the drop in 2028 Investment's long position.

The idea behind North American Financial and 2028 Investment Grade 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.