Correlation Between Northern Lights and Valued Advisers
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Valued Advisers 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 Valued Advisers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Valued Advisers Trust, you can compare the effects of market volatilities on Northern Lights and Valued Advisers 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 Valued Advisers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Valued Advisers.
Diversification Opportunities for Northern Lights and Valued Advisers
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Valued is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Valued Advisers Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valued Advisers Trust 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 Valued Advisers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valued Advisers Trust has no effect on the direction of Northern Lights i.e., Northern Lights and Valued Advisers go up and down completely randomly.
Pair Corralation between Northern Lights and Valued Advisers
Given the investment horizon of 90 days Northern Lights is expected to generate 0.86 times more return on investment than Valued Advisers. However, Northern Lights is 1.17 times less risky than Valued Advisers. It trades about 0.41 of its potential returns per unit of risk. Valued Advisers Trust is currently generating about -0.03 per unit of risk. If you would invest 2,545 in Northern Lights on September 1, 2024 and sell it today you would earn a total of 45.00 from holding Northern Lights or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Northern Lights vs. Valued Advisers Trust
Performance |
| Timeline |
| Northern Lights |
| Valued Advisers Trust |
Northern Lights and Valued Advisers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Valued Advisers
The main advantage of trading using opposite Northern Lights and Valued Advisers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Valued Advisers 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 Valued Advisers will offset losses from the drop in Valued Advisers' long position.| Northern Lights vs. Valued Advisers Trust | Northern Lights vs. Columbia Diversified Fixed | Northern Lights vs. Principal Exchange Traded Funds | Northern Lights vs. Doubleline Etf Trust |
| Valued Advisers vs. SPDR Barclays Long | Valued Advisers vs. SPDR Portfolio Intermediate | Valued Advisers vs. SPDR Barclays Short | Valued Advisers vs. SPDR Barclays Intermediate |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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