Correlation Between Northern Data and US FOODS
Can any of the company-specific risk be diversified away by investing in both Northern Data and US FOODS 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 Northern Data and US FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Data AG and US FOODS HOLDING, you can compare the effects of market volatilities on Northern Data and US FOODS 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 Northern Data with a short position of US FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and US FOODS.
Diversification Opportunities for Northern Data and US FOODS
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and UFH is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG and US FOODS HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US FOODS HOLDING and Northern Data 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 Northern Data AG are associated (or correlated) with US FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US FOODS HOLDING has no effect on the direction of Northern Data i.e., Northern Data and US FOODS go up and down completely randomly.
Pair Corralation between Northern Data and US FOODS
Assuming the 90 days trading horizon Northern Data AG is expected to generate 5.29 times more return on investment than US FOODS. However, Northern Data is 5.29 times more volatile than US FOODS HOLDING. It trades about 0.21 of its potential returns per unit of risk. US FOODS HOLDING is currently generating about -0.05 per unit of risk. If you would invest 4,165 in Northern Data AG on October 12, 2024 and sell it today you would earn a total of 675.00 from holding Northern Data AG or generate 16.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Northern Data AG vs. US FOODS HOLDING
Performance |
Timeline |
Northern Data AG |
US FOODS HOLDING |
Northern Data and US FOODS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Northern Data and US FOODS
The main advantage of trading using opposite Northern Data and US FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data position performs unexpectedly, US FOODS 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 US FOODS will offset losses from the drop in US FOODS's long position.Northern Data vs. RELIANCE STEEL AL | Northern Data vs. NEW MILLENNIUM IRON | Northern Data vs. VELA TECHNOLPLC LS 0001 | Northern Data vs. STEEL DYNAMICS |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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