Correlation Between James Balanced and Northern Fixed

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

By analyzing existing cross correlation between James Balanced Golden and Northern Fixed Income, you can compare the effects of market volatilities on James Balanced and Northern Fixed 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 James Balanced with a short position of Northern Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Balanced and Northern Fixed.

Diversification Opportunities for James Balanced and Northern Fixed

0.75

Correlation Coefficient

James Balanced  Northern Fixed

Poor diversification

The 3 months correlation between James and Northern is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding James Balanced Golden and Northern Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Fixed Income and James Balanced 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 James Balanced Golden are associated (or correlated) with Northern Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Fixed Income has no effect on the direction of James Balanced i.e., James Balanced and Northern Fixed go up and down completely randomly.

Pair Corralation between James Balanced and Northern Fixed

Assuming the 90 days horizon James Balanced Golden is expected to generate 1.11 times more return on investment than Northern Fixed. However, James Balanced is 1.11 times more volatile than Northern Fixed Income. It trades about 0.09 of its potential returns per unit of risk. Northern Fixed Income is currently generating about 0.03 per unit of risk. If you would invest  1,872  in James Balanced Golden on October 26, 2024 and sell it today you would earn a total of  413.00  from holding James Balanced Golden or generate 22.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

James Balanced Golden  vs.  Northern Fixed Income

James Balanced Golden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days James Balanced Golden has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, James Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Northern Fixed Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Fixed Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Northern Fixed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with James Balanced and Northern Fixed

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

The idea behind James Balanced Golden and Northern Fixed Income 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.