Correlation Between Northern Lights and Vanguard Intermediate
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Vanguard Intermediate 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 Vanguard Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Vanguard Intermediate Term Treasury, you can compare the effects of market volatilities on Northern Lights and Vanguard Intermediate 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 Vanguard Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Vanguard Intermediate.
Diversification Opportunities for Northern Lights and Vanguard Intermediate
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and Vanguard is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Vanguard Intermediate Term Tre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate 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 Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of Northern Lights i.e., Northern Lights and Vanguard Intermediate go up and down completely randomly.
Pair Corralation between Northern Lights and Vanguard Intermediate
Given the investment horizon of 90 days Northern Lights is expected to under-perform the Vanguard Intermediate. But the etf apears to be less risky and, when comparing its historical volatility, Northern Lights is 1.12 times less risky than Vanguard Intermediate. The etf trades about -0.07 of its potential returns per unit of risk. The Vanguard Intermediate Term Treasury is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,785 in Vanguard Intermediate Term Treasury on October 26, 2024 and sell it today you would earn a total of 17.00 from holding Vanguard Intermediate Term Treasury or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Vanguard Intermediate Term Tre
Performance |
| Timeline |
| Northern Lights |
| Vanguard Intermediate |
Northern Lights and Vanguard Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Vanguard Intermediate
The main advantage of trading using opposite Northern Lights and Vanguard Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Vanguard Intermediate 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 Vanguard Intermediate will offset losses from the drop in Vanguard Intermediate's long position.| Northern Lights vs. MFS Active Exchange | Northern Lights vs. First Trust Exchange Traded | Northern Lights vs. Vanguard Intermediate Term Treasury | Northern Lights vs. Vanguard Long Term Treasury |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Directory Find actively traded commodities issued by global exchanges |