Correlation Between Northern Small and Ssga International

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

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

Diversification Opportunities for Northern Small and Ssga International

-0.63

Correlation Coefficient

Northern Small  Ssga International

Excellent diversification

The 3 months correlation between Northern and Ssga is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Northern Small Cap and Ssga International Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssga International Stock and Northern Small 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 Small Cap are associated (or correlated) with Ssga International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssga International Stock has no effect on the direction of Northern Small i.e., Northern Small and Ssga International go up and down completely randomly.

Pair Corralation between Northern Small and Ssga International

Assuming the 90 days horizon Northern Small Cap is expected to under-perform the Ssga International. In addition to that, Northern Small is 1.2 times more volatile than Ssga International Stock. It trades about -0.07 of its total potential returns per unit of risk. Ssga International Stock is currently generating about 0.19 per unit of volatility. If you would invest  1,091  in Ssga International Stock on December 29, 2024 and sell it today you would earn a total of  108.00  from holding Ssga International Stock or generate 9.9% return on investment over 90 days.

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

Northern Small Cap  vs.  Ssga International Stock

Northern Small Cap

Risk-Adjusted Performance

Very Weak

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

Ssga International Stock

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ssga International Stock are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ssga International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Northern Small and Ssga International

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

The idea behind Northern Small Cap and Ssga International Stock 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.