Correlation Between Northern Income and Multi-manager Global
Can any of the company-specific risk be diversified away by investing in both Northern Income and Multi-manager Global 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 Income and Multi-manager Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Income Equity and Multi Manager Global Real, you can compare the effects of market volatilities on Northern Income and Multi-manager Global 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 Income with a short position of Multi-manager Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Income and Multi-manager Global.
Diversification Opportunities for Northern Income and Multi-manager Global
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and Multi-manager is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Northern Income Equity and Multi Manager Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Global and Northern Income 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 Income Equity are associated (or correlated) with Multi-manager Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Global has no effect on the direction of Northern Income i.e., Northern Income and Multi-manager Global go up and down completely randomly.
Pair Corralation between Northern Income and Multi-manager Global
Assuming the 90 days horizon Northern Income Equity is expected to generate 1.12 times more return on investment than Multi-manager Global. However, Northern Income is 1.12 times more volatile than Multi Manager Global Real. It trades about 0.35 of its potential returns per unit of risk. Multi Manager Global Real is currently generating about 0.13 per unit of risk. If you would invest 1,529 in Northern Income Equity on April 23, 2025 and sell it today you would earn a total of 273.00 from holding Northern Income Equity or generate 17.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Income Equity vs. Multi Manager Global Real
Performance |
| Timeline |
| Northern Income Equity |
| Multi Manager Global |
Northern Income and Multi-manager Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Income and Multi-manager Global
The main advantage of trading using opposite Northern Income and Multi-manager Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Income position performs unexpectedly, Multi-manager Global 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 Multi-manager Global will offset losses from the drop in Multi-manager Global's long position.| Northern Income vs. Northern High Yield | Northern Income vs. Northern International Equity | Northern Income vs. Northern Large Cap | Northern Income vs. Northern Stock Index |
| Multi-manager Global vs. Fidelity Large Cap | Multi-manager Global vs. Dunham Focused Large | Multi-manager Global vs. Vest Large Cap | Multi-manager Global vs. Qs Large Cap |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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