Correlation Between Northern Trust and COREBRIDGE FINANCIAL

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

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

Diversification Opportunities for Northern Trust and COREBRIDGE FINANCIAL

0.81

Correlation Coefficient

Northern Trust  COREBRIDGE FINANCIAL

Very poor diversification

The 3 months correlation between Northern and COREBRIDGE is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Northern Trust and COREBRIDGE FINANCIAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COREBRIDGE FINANCIAL INC and Northern Trust 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 Trust are associated (or correlated) with COREBRIDGE FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COREBRIDGE FINANCIAL INC has no effect on the direction of Northern Trust i.e., Northern Trust and COREBRIDGE FINANCIAL go up and down completely randomly.

Pair Corralation between Northern Trust and COREBRIDGE FINANCIAL

Assuming the 90 days horizon Northern Trust is expected to under-perform the COREBRIDGE FINANCIAL. But the stock apears to be less risky and, when comparing its historical volatility, Northern Trust is 1.3 times less risky than COREBRIDGE FINANCIAL. The stock trades about -0.08 of its potential returns per unit of risk. The COREBRIDGE FINANCIAL INC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,877  in COREBRIDGE FINANCIAL INC on December 24, 2024 and sell it today you would earn a total of  103.00  from holding COREBRIDGE FINANCIAL INC or generate 3.58% return on investment over 90 days.

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

Northern Trust  vs.  COREBRIDGE FINANCIAL INC

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.

COREBRIDGE FINANCIAL INC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COREBRIDGE FINANCIAL INC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COREBRIDGE FINANCIAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Northern Trust and COREBRIDGE FINANCIAL

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

The idea behind Northern Trust and COREBRIDGE FINANCIAL INC 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.