Correlation Between Even Herd and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Even Herd 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 Even Herd and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Even Herd Long and Northern Lights, you can compare the effects of market volatilities on Even Herd 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 Even Herd with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Even Herd and Northern Lights.
Diversification Opportunities for Even Herd and Northern Lights
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Even and Northern is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Even Herd Long and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Even Herd 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 Even Herd Long 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 Even Herd i.e., Even Herd and Northern Lights go up and down completely randomly.
Pair Corralation between Even Herd and Northern Lights
Given the investment horizon of 90 days Even Herd Long is expected to generate 1.79 times more return on investment than Northern Lights. However, Even Herd is 1.79 times more volatile than Northern Lights. It trades about 0.42 of its potential returns per unit of risk. Northern Lights is currently generating about 0.2 per unit of risk. If you would invest 2,118 in Even Herd Long on August 29, 2024 and sell it today you would earn a total of 226.00 from holding Even Herd Long or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Even Herd Long vs. Northern Lights
Performance |
| Timeline |
| Even Herd Long |
| Northern Lights |
Even Herd and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Even Herd and Northern Lights
The main advantage of trading using opposite Even Herd and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Even Herd 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.| Even Herd vs. ProShares Merger ETF | Even Herd vs. Simplify Exchange Traded | Even Herd vs. Tuttle Capital Shareholders | Even Herd vs. Simplify Exchange Traded |
| Northern Lights vs. ProShares Merger ETF | Northern Lights vs. Even Herd Long | Northern Lights vs. Simplify Exchange Traded | Northern Lights vs. Tuttle Capital Shareholders |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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