Correlation Between Origin Emerging and Northern Small
Can any of the company-specific risk be diversified away by investing in both Origin Emerging and Northern Small 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 Origin Emerging and Northern Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Emerging Markets and Northern Small Cap, you can compare the effects of market volatilities on Origin Emerging and Northern Small 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 Origin Emerging with a short position of Northern Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Emerging and Northern Small.
Diversification Opportunities for Origin Emerging and Northern Small
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Origin and Northern is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Origin Emerging Markets and Northern Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Small Cap and Origin Emerging 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 Origin Emerging Markets are associated (or correlated) with Northern Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Small Cap has no effect on the direction of Origin Emerging i.e., Origin Emerging and Northern Small go up and down completely randomly.
Pair Corralation between Origin Emerging and Northern Small
Assuming the 90 days horizon Origin Emerging Markets is expected to generate 0.39 times more return on investment than Northern Small. However, Origin Emerging Markets is 2.59 times less risky than Northern Small. It trades about 0.02 of its potential returns per unit of risk. Northern Small Cap is currently generating about -0.1 per unit of risk. If you would invest 1,038 in Origin Emerging Markets on September 25, 2024 and sell it today you would earn a total of 8.00 from holding Origin Emerging Markets or generate 0.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Origin Emerging Markets vs. Northern Small Cap
Performance |
Timeline |
Origin Emerging Markets |
Northern Small Cap |
Origin Emerging and Northern Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Origin Emerging and Northern Small
The main advantage of trading using opposite Origin Emerging and Northern Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Emerging position performs unexpectedly, Northern Small 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 Small will offset losses from the drop in Northern Small's long position.Origin Emerging vs. Glg Intl Small | Origin Emerging vs. Lebenthal Lisanti Small | Origin Emerging vs. Df Dent Small | Origin Emerging vs. Touchstone Small Cap |
Northern Small vs. Western Asset Diversified | Northern Small vs. Ashmore Emerging Markets | Northern Small vs. Calvert Developed Market | Northern Small vs. Origin Emerging Markets |
Check out your portfolio center.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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