Correlation Between Track Data and Northern Trust

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

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

Diversification Opportunities for Track Data and Northern Trust

-0.82

Correlation Coefficient

Track Data  Northern Trust

Pay attention - limited upside

The 3 months correlation between Track and Northern is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Track Data and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust and Track Data 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 Track Data 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 Track Data i.e., Track Data and Northern Trust go up and down completely randomly.

Pair Corralation between Track Data and Northern Trust

If you would invest  2,152  in Northern Trust on August 31, 2024 and sell it today you would lose (4.00) from holding Northern Trust or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Track Data  vs.  Northern Trust

Track Data

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Track Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Track Data is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Northern Trust

Risk-Adjusted Performance

0 of 100

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 recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Track Data and Northern Trust

The main advantage of trading using opposite Track Data and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Track Data 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 Track Data 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.