Correlation Between NISSIN FOODS and Northern Trust

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

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

Diversification Opportunities for NISSIN FOODS and Northern Trust

-0.3

Correlation Coefficient

NISSIN FOODS  Northern Trust

Very good diversification

The 3 months correlation between NISSIN and Northern is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NISSIN FOODS HLDGS and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust and NISSIN FOODS 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 NISSIN FOODS HLDGS 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 NISSIN FOODS i.e., NISSIN FOODS and Northern Trust go up and down completely randomly.

Pair Corralation between NISSIN FOODS and Northern Trust

Assuming the 90 days trading horizon NISSIN FOODS HLDGS is expected to under-perform the Northern Trust. In addition to that, NISSIN FOODS is 1.04 times more volatile than Northern Trust. It trades about -0.05 of its total potential returns per unit of risk. Northern Trust is currently generating about 0.11 per unit of volatility. If you would invest  7,233  in Northern Trust on October 22, 2024 and sell it today you would earn a total of  3,067  from holding Northern Trust or generate 42.4% return on investment over 90 days.

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

NISSIN FOODS HLDGS  vs.  Northern Trust

NISSIN FOODS HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISSIN FOODS HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Northern Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Northern Trust reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NISSIN FOODS and Northern Trust

The main advantage of trading using opposite NISSIN FOODS and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSIN FOODS 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 NISSIN FOODS HLDGS 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 CEOs Directory module to screen CEOs from public companies around the world.