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Correlation Between DOW and Northern Funds

Analyzing existing cross correlation between DOW and Northern Funds Large Cap Value. You can compare the effects of market volatilities on DOW and Northern Funds 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 DOW with a short position of Northern Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of DOW and Northern Funds.

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Diversification Opportunities for DOW and Northern Funds

DOW diversification synergy
0.66
DOW
NO

Poor diversification

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

Given the investment horizon of 30 days, DOW is expected to generate 0.83 times more return on investment than Northern Funds. However, DOW is 1.21 times less risky than Northern Funds. It trades about -0.12 of its potential returns per unit of risk. Northern Funds Large Cap Value is currently generating about -0.16 per unit of risk. If you would invest  2,778,304  in DOW on January 30, 2020 and sell it today you would lose (237,368)  from holding DOW or give up 8.54% of portfolio value over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy96.88%
ValuesDaily Returns

DOW  vs.  Northern Funds Large Cap Value

 Performance (%) 
    
  Timeline 
 Predicted Return Density 
    
  Returns 
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