Correlation Between Locorr Dynamic and Northern Large

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

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

Diversification Opportunities for Locorr Dynamic and Northern Large

0.72

Correlation Coefficient

Locorr Dynamic  Northern Large

Poor diversification

The 3 months correlation between Locorr and Northern is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Dynamic Equity and Northern Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Large Cap and Locorr Dynamic 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 Locorr Dynamic Equity are associated (or correlated) with Northern Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Large Cap has no effect on the direction of Locorr Dynamic i.e., Locorr Dynamic and Northern Large go up and down completely randomly.

Pair Corralation between Locorr Dynamic and Northern Large

Assuming the 90 days horizon Locorr Dynamic Equity is expected to generate 0.86 times more return on investment than Northern Large. However, Locorr Dynamic Equity is 1.16 times less risky than Northern Large. It trades about -0.01 of its potential returns per unit of risk. Northern Large Cap is currently generating about -0.08 per unit of risk. If you would invest  1,167  in Locorr Dynamic Equity on May 4, 2025 and sell it today you would lose (1.00) from holding Locorr Dynamic Equity or give up 0.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Locorr Dynamic Equity  vs.  Northern Large Cap

Locorr Dynamic Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Locorr Dynamic Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Locorr Dynamic may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Northern Large Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Large Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Northern Large may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Locorr Dynamic and Northern Large

The main advantage of trading using opposite Locorr Dynamic and Northern Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Locorr Dynamic position performs unexpectedly, Northern Large 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 Large will offset losses from the drop in Northern Large's long position.

The idea behind Locorr Dynamic Equity and Northern Large Cap 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.