Correlation Between Northern Trust and ALPS International

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

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

Diversification Opportunities for Northern Trust and ALPS International

0.0

Correlation Coefficient

Northern Trust  ALPS International

Pay attention - limited upside

The 3 months correlation between Northern and ALPS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Northern Trust and ALPS International Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS International Sector 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 ALPS International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS International Sector has no effect on the direction of Northern Trust i.e., Northern Trust and ALPS International go up and down completely randomly.

Pair Corralation between Northern Trust and ALPS International

If you would invest  2,863  in ALPS International Sector on December 27, 2024 and sell it today you would earn a total of  333.00  from holding ALPS International Sector or generate 11.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Northern Trust  vs.  ALPS International Sector

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. In spite of very healthy basic indicators, Northern Trust is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

ALPS International Sector

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ALPS International Sector are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALPS International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Northern Trust and ALPS International

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

The idea behind Northern Trust and ALPS International Sector 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.