Correlation Between Northern Trust and Kayne Anderson
Can any of the company-specific risk be diversified away by investing in both Northern Trust and Kayne Anderson 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 Kayne Anderson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Trust and Kayne Anderson MLP, you can compare the effects of market volatilities on Northern Trust and Kayne Anderson 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 Kayne Anderson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Trust and Kayne Anderson.
Diversification Opportunities for Northern Trust and Kayne Anderson
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northern and Kayne is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Northern Trust and Kayne Anderson MLP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kayne Anderson MLP 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 Kayne Anderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kayne Anderson MLP has no effect on the direction of Northern Trust i.e., Northern Trust and Kayne Anderson go up and down completely randomly.
Pair Corralation between Northern Trust and Kayne Anderson
Assuming the 90 days horizon Northern Trust is expected to under-perform the Kayne Anderson. But the preferred stock apears to be less risky and, when comparing its historical volatility, Northern Trust is 1.19 times less risky than Kayne Anderson. The preferred stock trades about -0.04 of its potential returns per unit of risk. The Kayne Anderson MLP is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,055 in Kayne Anderson MLP on September 5, 2024 and sell it today you would earn a total of 246.00 from holding Kayne Anderson MLP or generate 23.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Northern Trust vs. Kayne Anderson MLP
Performance |
Timeline |
Northern Trust |
Kayne Anderson MLP |
Northern Trust and Kayne Anderson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Northern Trust and Kayne Anderson
The main advantage of trading using opposite Northern Trust and Kayne Anderson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Trust position performs unexpectedly, Kayne Anderson 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 Kayne Anderson will offset losses from the drop in Kayne Anderson's long position.Northern Trust vs. The Gabelli Equity | Northern Trust vs. The Gabelli Multimedia | Northern Trust vs. The Gabelli Equity | Northern Trust vs. Virtus AllianzGI Convertible |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
Global Correlations Find global opportunities by holding instruments from different markets | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |