Correlation Between Element Global and Northern Lion
Can any of the company-specific risk be diversified away by investing in both Element Global and Northern Lion 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 Element Global and Northern Lion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Global and Northern Lion Gold, you can compare the effects of market volatilities on Element Global and Northern Lion 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 Element Global with a short position of Northern Lion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Global and Northern Lion.
Diversification Opportunities for Element Global and Northern Lion
-1.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Element and Northern is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Element Global and Northern Lion Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lion Gold and Element Global 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 Element Global are associated (or correlated) with Northern Lion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lion Gold has no effect on the direction of Element Global i.e., Element Global and Northern Lion go up and down completely randomly.
Pair Corralation between Element Global and Northern Lion
Given the investment horizon of 90 days Element Global is expected to generate 26.86 times more return on investment than Northern Lion. However, Element Global is 26.86 times more volatile than Northern Lion Gold. It trades about 0.05 of its potential returns per unit of risk. Northern Lion Gold is currently generating about -0.05 per unit of risk. If you would invest 0.01 in Element Global on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Element Global or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Global vs. Northern Lion Gold
Performance |
| Timeline |
| Element Global |
| Northern Lion Gold |
Element Global and Northern Lion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Global and Northern Lion
The main advantage of trading using opposite Element Global and Northern Lion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Global position performs unexpectedly, Northern Lion 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 Lion will offset losses from the drop in Northern Lion's long position.| Element Global vs. HUMANA INC | Element Global vs. Barloworld Ltd ADR | Element Global vs. Morningstar Unconstrained Allocation | Element Global vs. Thrivent High Yield |
| Northern Lion vs. Stepan Company | Northern Lion vs. Yuexiu Transport Infrastructure | Northern Lion vs. CenterPoint Energy | Northern Lion vs. Saia Inc |
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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