Correlation Between Northern Lights and Aptus Defined
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Aptus Defined 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 Aptus Defined into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Aptus Defined Risk, you can compare the effects of market volatilities on Northern Lights and Aptus Defined 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 Aptus Defined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Aptus Defined.
Diversification Opportunities for Northern Lights and Aptus Defined
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northern and Aptus is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Aptus Defined Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptus Defined Risk 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 Aptus Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptus Defined Risk has no effect on the direction of Northern Lights i.e., Northern Lights and Aptus Defined go up and down completely randomly.
Pair Corralation between Northern Lights and Aptus Defined
Given the investment horizon of 90 days Northern Lights is expected to generate 1.16 times more return on investment than Aptus Defined. However, Northern Lights is 1.16 times more volatile than Aptus Defined Risk. It trades about 0.07 of its potential returns per unit of risk. Aptus Defined Risk is currently generating about 0.05 per unit of risk. If you would invest 2,759 in Northern Lights on September 12, 2024 and sell it today you would earn a total of 24.00 from holding Northern Lights or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Aptus Defined Risk
Performance |
| Timeline |
| Northern Lights |
| Aptus Defined Risk |
Northern Lights and Aptus Defined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Aptus Defined
The main advantage of trading using opposite Northern Lights and Aptus Defined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Aptus Defined 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 Aptus Defined will offset losses from the drop in Aptus Defined's long position.| Northern Lights vs. Vanguard SP 500 | Northern Lights vs. Vanguard Real Estate | Northern Lights vs. Vanguard Total Bond | Northern Lights vs. Vanguard High Dividend |
| Aptus Defined vs. Amplify BlackSwan Growth | Aptus Defined vs. Aptus Collared Income | Aptus Defined vs. Aptus Drawdown Managed | Aptus Defined vs. Cambria Tail Risk |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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