Correlation Between FFHG and Northern Lights
Can any of the company-specific risk be diversified away by investing in both FFHG 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 FFHG and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FFHG and Northern Lights, you can compare the effects of market volatilities on FFHG 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 FFHG with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of FFHG and Northern Lights.
Diversification Opportunities for FFHG and Northern Lights
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FFHG and Northern is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding FFHG and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and FFHG 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 FFHG 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 FFHG i.e., FFHG and Northern Lights go up and down completely randomly.
Pair Corralation between FFHG and Northern Lights
Given the investment horizon of 90 days FFHG is expected to generate 0.6 times more return on investment than Northern Lights. However, FFHG is 1.67 times less risky than Northern Lights. It trades about 0.22 of its potential returns per unit of risk. Northern Lights is currently generating about 0.07 per unit of risk. If you would invest 3,249 in FFHG on September 1, 2024 and sell it today you would earn a total of 100.00 from holding FFHG or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 8.22% |
| Values | Daily Returns |
FFHG vs. Northern Lights
Performance |
| Timeline |
| FFHG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Northern Lights |
FFHG and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FFHG and Northern Lights
The main advantage of trading using opposite FFHG and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FFHG 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.| FFHG vs. FT Vest Equity | FFHG vs. Zillow Group Class | FFHG vs. Northern Lights | FFHG vs. VanEck Vectors Moodys |
| Northern Lights vs. Tidal Trust II | Northern Lights vs. ProShares Merger ETF | Northern Lights vs. Even Herd Long | Northern Lights vs. Simplify Exchange Traded |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |