Correlation Between 2023 ETF and Northern Lights
Can any of the company-specific risk be diversified away by investing in both 2023 ETF and Northern Lights 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 2023 ETF and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2023 ETF Series and Northern Lights, you can compare the effects of market volatilities on 2023 ETF and Northern Lights 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 2023 ETF with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2023 ETF and Northern Lights.
Diversification Opportunities for 2023 ETF and Northern Lights
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 2023 and Northern is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding 2023 ETF Series and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and 2023 ETF 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 2023 ETF Series are associated (or correlated) with Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of 2023 ETF i.e., 2023 ETF and Northern Lights go up and down completely randomly.
Pair Corralation between 2023 ETF and Northern Lights
Given the investment horizon of 90 days 2023 ETF is expected to generate 1.16 times less return on investment than Northern Lights. But when comparing it to its historical volatility, 2023 ETF Series is 1.05 times less risky than Northern Lights. It trades about 0.1 of its potential returns per unit of risk. Northern Lights is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,374 in Northern Lights on August 30, 2024 and sell it today you would earn a total of 1,200 from holding Northern Lights or generate 50.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 58.59% |
| Values | Daily Returns |
2023 ETF Series vs. Northern Lights
Performance |
| Timeline |
| 2023 ETF Series |
| Northern Lights |
2023 ETF and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2023 ETF and Northern Lights
The main advantage of trading using opposite 2023 ETF and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2023 ETF position performs unexpectedly, Northern Lights 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 Lights will offset losses from the drop in Northern Lights' long position.| 2023 ETF vs. FT Vest Equity | 2023 ETF vs. Northern Lights | 2023 ETF vs. Dimensional International High | 2023 ETF vs. First Trust Exchange Traded |
| Northern Lights vs. iShares MSCI USA | Northern Lights vs. iShares MSCI USA | Northern Lights vs. iShares MSCI USA | Northern Lights vs. iShares Expanded Tech Software |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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