Correlation Between NORTHERN NIGERIA and GREENWICH ASSET

Can any of the company-specific risk be diversified away by investing in both NORTHERN NIGERIA and GREENWICH ASSET 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 NIGERIA and GREENWICH ASSET into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NORTHERN NIGERIA FLOUR and GREENWICH ASSET ETF, you can compare the effects of market volatilities on NORTHERN NIGERIA and GREENWICH ASSET 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 NIGERIA with a short position of GREENWICH ASSET. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHERN NIGERIA and GREENWICH ASSET.

Diversification Opportunities for NORTHERN NIGERIA and GREENWICH ASSET

-0.49

Correlation Coefficient

NORTHERN NIGERIA  GREENWICH ASSET

Very good diversification

The 3 months correlation between NORTHERN and GREENWICH is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding NORTHERN NIGERIA FLOUR and GREENWICH ASSET ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENWICH ASSET ETF and NORTHERN NIGERIA 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 NIGERIA FLOUR are associated (or correlated) with GREENWICH ASSET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENWICH ASSET ETF has no effect on the direction of NORTHERN NIGERIA i.e., NORTHERN NIGERIA and GREENWICH ASSET go up and down completely randomly.

Pair Corralation between NORTHERN NIGERIA and GREENWICH ASSET

Assuming the 90 days trading horizon NORTHERN NIGERIA is expected to generate 3.68 times less return on investment than GREENWICH ASSET. But when comparing it to its historical volatility, NORTHERN NIGERIA FLOUR is 5.73 times less risky than GREENWICH ASSET. It trades about 0.12 of its potential returns per unit of risk. GREENWICH ASSET ETF is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  10,000  in GREENWICH ASSET ETF on September 28, 2024 and sell it today you would earn a total of  43,400  from holding GREENWICH ASSET ETF or generate 434.0% return on investment over 90 days.

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

NORTHERN NIGERIA FLOUR  vs.  GREENWICH ASSET ETF

NORTHERN NIGERIA FLOUR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NORTHERN NIGERIA FLOUR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, NORTHERN NIGERIA displayed solid returns over the last few months and may actually be approaching a breakup point.

GREENWICH ASSET ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREENWICH ASSET ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NORTHERN NIGERIA and GREENWICH ASSET

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

The idea behind NORTHERN NIGERIA FLOUR and GREENWICH ASSET ETF 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.