Correlation Between FT Vest and Northern Lights
Can any of the company-specific risk be diversified away by investing in both FT Vest 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 FT Vest and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Vest Equity and Northern Lights, you can compare the effects of market volatilities on FT Vest 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 FT Vest with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and Northern Lights.
Diversification Opportunities for FT Vest and Northern Lights
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DHDG and Northern is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and FT Vest 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 FT Vest Equity 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 FT Vest i.e., FT Vest and Northern Lights go up and down completely randomly.
Pair Corralation between FT Vest and Northern Lights
Given the investment horizon of 90 days FT Vest Equity is expected to generate 0.67 times more return on investment than Northern Lights. However, FT Vest Equity is 1.49 times less risky than Northern Lights. It trades about 0.12 of its potential returns per unit of risk. Northern Lights is currently generating about 0.08 per unit of risk. If you would invest 3,012 in FT Vest Equity on November 1, 2024 and sell it today you would earn a total of 117.00 from holding FT Vest Equity or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FT Vest Equity vs. Northern Lights
Performance |
| Timeline |
| FT Vest Equity |
| Northern Lights |
FT Vest and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Vest and Northern Lights
The main advantage of trading using opposite FT Vest and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest 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.| FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. First Trust Exchange Traded | FT Vest vs. EA Series Trust |
| Northern Lights vs. Sterling Capital Focus | Northern Lights vs. Northern Lights | Northern Lights vs. First Trust Exchange Traded | Northern Lights vs. Northern Lights |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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