Correlation Between KBC Ancora and Northern Trust

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

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

Diversification Opportunities for KBC Ancora and Northern Trust

0.0

Correlation Coefficient

KBC Ancora  Northern Trust

Pay attention - limited upside

The 3 months correlation between KBC and Northern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KBC Ancora SCA and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust and KBC Ancora 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 KBC Ancora SCA 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 KBC Ancora i.e., KBC Ancora and Northern Trust go up and down completely randomly.

Pair Corralation between KBC Ancora and Northern Trust

Assuming the 90 days horizon KBC Ancora is expected to generate 8.2 times less return on investment than Northern Trust. But when comparing it to its historical volatility, KBC Ancora SCA is 1.31 times less risky than Northern Trust. It trades about 0.03 of its potential returns per unit of risk. Northern Trust is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  8,091  in Northern Trust on September 25, 2024 and sell it today you would earn a total of  1,759  from holding Northern Trust or generate 21.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

KBC Ancora SCA  vs.  Northern Trust

KBC Ancora SCA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Ancora SCA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, KBC Ancora is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Northern Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northern Trust reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KBC Ancora and Northern Trust

The main advantage of trading using opposite KBC Ancora and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBC Ancora 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 KBC Ancora SCA 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.