Correlation Between Northern Trust and Cabana Target
Can any of the company-specific risk be diversified away by investing in both Northern Trust and Cabana Target 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 Cabana Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Trust Tax Exempt and Cabana Target Drawdown, you can compare the effects of market volatilities on Northern Trust and Cabana Target 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 Cabana Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Trust and Cabana Target.
Diversification Opportunities for Northern Trust and Cabana Target
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Cabana is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Northern Trust Tax Exempt and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown 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 Tax Exempt are associated (or correlated) with Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of Northern Trust i.e., Northern Trust and Cabana Target go up and down completely randomly.
Pair Corralation between Northern Trust and Cabana Target
Given the investment horizon of 90 days Northern Trust is expected to generate 2.67 times less return on investment than Cabana Target. But when comparing it to its historical volatility, Northern Trust Tax Exempt is 2.93 times less risky than Cabana Target. It trades about 0.2 of its potential returns per unit of risk. Cabana Target Drawdown is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,305 in Cabana Target Drawdown on September 12, 2025 and sell it today you would earn a total of 94.00 from holding Cabana Target Drawdown or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Trust Tax Exempt vs. Cabana Target Drawdown
Performance |
| Timeline |
| Northern Trust Tax |
| Cabana Target Drawdown |
Northern Trust and Cabana Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Trust and Cabana Target
The main advantage of trading using opposite Northern Trust and Cabana Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Trust position performs unexpectedly, Cabana Target 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 Cabana Target will offset losses from the drop in Cabana Target's long position.| Northern Trust vs. Goldman Sachs ETF | Northern Trust vs. Fidelity Real Estate | Northern Trust vs. Direxion Daily Magnificent | Northern Trust vs. Northern Lights |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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