Correlation Between Northern Lights and Inspire Faithward
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Inspire Faithward 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 Lights and Inspire Faithward into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Inspire Faithward Mid, you can compare the effects of market volatilities on Northern Lights and Inspire Faithward 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 Lights with a short position of Inspire Faithward. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Inspire Faithward.
Diversification Opportunities for Northern Lights and Inspire Faithward
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Inspire is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Inspire Faithward Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Faithward Mid and Northern Lights 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 Lights are associated (or correlated) with Inspire Faithward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Faithward Mid has no effect on the direction of Northern Lights i.e., Northern Lights and Inspire Faithward go up and down completely randomly.
Pair Corralation between Northern Lights and Inspire Faithward
Given the investment horizon of 90 days Northern Lights is expected to generate 0.95 times more return on investment than Inspire Faithward. However, Northern Lights is 1.06 times less risky than Inspire Faithward. It trades about 0.1 of its potential returns per unit of risk. Inspire Faithward Mid is currently generating about 0.07 per unit of risk. If you would invest 3,744 in Northern Lights on August 29, 2024 and sell it today you would earn a total of 478.00 from holding Northern Lights or generate 12.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Inspire Faithward Mid
Performance |
| Timeline |
| Northern Lights |
| Inspire Faithward Mid |
Northern Lights and Inspire Faithward Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Inspire Faithward
The main advantage of trading using opposite Northern Lights and Inspire Faithward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Inspire Faithward 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 Inspire Faithward will offset losses from the drop in Inspire Faithward's long position.| Northern Lights vs. Inspire Global Hope | Northern Lights vs. Inspire SmallMid Cap | Northern Lights vs. Inspire International ESG | Northern Lights vs. Northern Lights |
| Inspire Faithward vs. Northern Lights | Inspire Faithward vs. Inspire Tactical Balanced | Inspire Faithward vs. Inspire International ESG | Inspire Faithward vs. Inspire SmallMid 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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