Correlation Between Scholastic and NORTHERN

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

By analyzing existing cross correlation between Scholastic and NORTHERN TRUST PORATION, you can compare the effects of market volatilities on Scholastic and NORTHERN 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 Scholastic with a short position of NORTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholastic and NORTHERN.

Diversification Opportunities for Scholastic and NORTHERN

0.76

Correlation Coefficient

Scholastic  NORTHERN

Poor diversification

The 3 months correlation between Scholastic and NORTHERN is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and NORTHERN TRUST PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHERN TRUST PORATION and Scholastic 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 Scholastic are associated (or correlated) with NORTHERN. 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 PORATION has no effect on the direction of Scholastic i.e., Scholastic and NORTHERN go up and down completely randomly.

Pair Corralation between Scholastic and NORTHERN

Given the investment horizon of 90 days Scholastic is expected to under-perform the NORTHERN. In addition to that, Scholastic is 5.5 times more volatile than NORTHERN TRUST PORATION. It trades about -0.07 of its total potential returns per unit of risk. NORTHERN TRUST PORATION is currently generating about -0.03 per unit of volatility. If you would invest  8,565  in NORTHERN TRUST PORATION on October 7, 2024 and sell it today you would lose (336.00) from holding NORTHERN TRUST PORATION or give up 3.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.79%
Values	Daily Returns

Scholastic  vs.  NORTHERN TRUST PORATION

Scholastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scholastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

NORTHERN TRUST PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORTHERN TRUST PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NORTHERN TRUST PORATION investors.

Pair Trading with Scholastic and NORTHERN

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

The idea behind Scholastic and NORTHERN TRUST PORATION 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.