Correlation Between Northeast Investors and Rational Strategic

Can any of the company-specific risk be diversified away by investing in both Northeast Investors and Rational Strategic 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 Northeast Investors and Rational Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Northeast Investors Trust and Rational Strategic Allocation, you can compare the effects of market volatilities on Northeast Investors and Rational Strategic 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 Northeast Investors with a short position of Rational Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northeast Investors and Rational Strategic.

Diversification Opportunities for Northeast Investors and Rational Strategic

-0.18

Correlation Coefficient

Northeast Investors  Rational Strategic

Good diversification

The 3 months correlation between Northeast and Rational is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Investors Trust and Rational Strategic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Strategic and Northeast Investors 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 Northeast Investors Trust are associated (or correlated) with Rational Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Strategic has no effect on the direction of Northeast Investors i.e., Northeast Investors and Rational Strategic go up and down completely randomly.

Pair Corralation between Northeast Investors and Rational Strategic

Assuming the 90 days horizon Northeast Investors Trust is expected to generate 0.13 times more return on investment than Rational Strategic. However, Northeast Investors Trust is 7.65 times less risky than Rational Strategic. It trades about 0.06 of its potential returns per unit of risk. Rational Strategic Allocation is currently generating about -0.14 per unit of risk. If you would invest  363.00  in Northeast Investors Trust on December 25, 2024 and sell it today you would earn a total of  3.00  from holding Northeast Investors Trust or generate 0.83% return on investment over 90 days.

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

Northeast Investors Trust  vs.  Rational Strategic Allocation

Northeast Investors Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Northeast Investors Trust are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Northeast Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rational Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rational Strategic Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Northeast Investors and Rational Strategic

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

The idea behind Northeast Investors Trust and Rational Strategic Allocation 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.