Correlation Between MICRONIC MYDATA and Northern Trust

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

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

Diversification Opportunities for MICRONIC MYDATA and Northern Trust

0.37

Correlation Coefficient

MICRONIC MYDATA  Northern Trust

Weak diversification

The 3 months correlation between MICRONIC and Northern is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding MICRONIC MYDATA and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust and MICRONIC MYDATA 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 MICRONIC MYDATA 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 MICRONIC MYDATA i.e., MICRONIC MYDATA and Northern Trust go up and down completely randomly.

Pair Corralation between MICRONIC MYDATA and Northern Trust

Assuming the 90 days trading horizon MICRONIC MYDATA is expected to generate 1.47 times more return on investment than Northern Trust. However, MICRONIC MYDATA is 1.47 times more volatile than Northern Trust. It trades about 0.13 of its potential returns per unit of risk. Northern Trust is currently generating about -0.08 per unit of risk. If you would invest  3,498  in MICRONIC MYDATA on December 24, 2024 and sell it today you would earn a total of  612.00  from holding MICRONIC MYDATA or generate 17.5% return on investment over 90 days.

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

MICRONIC MYDATA  vs.  Northern Trust

MICRONIC MYDATA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MICRONIC MYDATA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, MICRONIC MYDATA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Northern Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

Pair Trading with MICRONIC MYDATA and Northern Trust

The main advantage of trading using opposite MICRONIC MYDATA and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MICRONIC MYDATA 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 MICRONIC MYDATA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.