Correlation Between ETRACS 2xMonthly and Northern Trust

Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly 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 ETRACS 2xMonthly and Northern Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETRACS 2xMonthly Pay and Northern Trust, you can compare the effects of market volatilities on ETRACS 2xMonthly 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 ETRACS 2xMonthly with a short position of Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and Northern Trust.

Diversification Opportunities for ETRACS 2xMonthly and Northern Trust

-0.84

Correlation Coefficient

ETRACS 2xMonthly  Northern Trust

Pay attention - limited upside

The 3 months correlation between ETRACS and Northern is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust and ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay 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 ETRACS 2xMonthly i.e., ETRACS 2xMonthly and Northern Trust go up and down completely randomly.

Pair Corralation between ETRACS 2xMonthly and Northern Trust

If you would invest  6,109  in Northern Trust on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Northern Trust or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

ETRACS 2xMonthly Pay  vs.  Northern Trust

ETRACS 2xMonthly Pay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETRACS 2xMonthly Pay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Northern Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Northern Trust is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ETRACS 2xMonthly and Northern Trust

The main advantage of trading using opposite ETRACS 2xMonthly and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.