Correlation Between North Square and Advisory Research

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

By analyzing existing cross correlation between North Square Investments and Advisory Research Strategic, you can compare the effects of market volatilities on North Square and Advisory Research 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 North Square with a short position of Advisory Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Square and Advisory Research.

Diversification Opportunities for North Square and Advisory Research

0.66

Correlation Coefficient

North Square  Advisory Research

Poor diversification

The 3 months correlation between North and Advisory is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding North Square Investments and Advisory Research Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advisory Research and North Square 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 North Square Investments are associated (or correlated) with Advisory Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advisory Research has no effect on the direction of North Square i.e., North Square and Advisory Research go up and down completely randomly.

Pair Corralation between North Square and Advisory Research

Assuming the 90 days horizon North Square Investments is expected to under-perform the Advisory Research. In addition to that, North Square is 3.42 times more volatile than Advisory Research Strategic. It trades about -0.05 of its total potential returns per unit of risk. Advisory Research Strategic is currently generating about 0.02 per unit of volatility. If you would invest  942.00  in Advisory Research Strategic on September 12, 2024 and sell it today you would earn a total of  2.00  from holding Advisory Research Strategic or generate 0.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

North Square Investments  vs.  Advisory Research Strategic

North Square Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Square Investments has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, North Square is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advisory Research

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advisory Research Strategic are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Advisory Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with North Square and Advisory Research

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

The idea behind North Square Investments and Advisory Research Strategic 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.