Correlation Between Northern Lights and Freedom Day

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Freedom Day 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 Freedom Day into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Freedom Day Dividend, you can compare the effects of market volatilities on Northern Lights and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Freedom Day.

Diversification Opportunities for Northern Lights and Freedom Day

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Northern and Freedom is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of Northern Lights i.e., Northern Lights and Freedom Day go up and down completely randomly.

Pair Corralation between Northern Lights and Freedom Day

Given the investment horizon of 90 days Northern Lights is expected to generate 1.12 times less return on investment than Freedom Day. But when comparing it to its historical volatility, Northern Lights is 1.02 times less risky than Freedom Day. It trades about 0.1 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,579  in Freedom Day Dividend on September 12, 2024 and sell it today you would earn a total of  836.50  from holding Freedom Day Dividend or generate 32.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.7%
ValuesDaily Returns

Northern Lights  vs.  Freedom Day Dividend

 Performance 
       Timeline  
Northern Lights 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Northern Lights are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Northern Lights may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Freedom Day Dividend 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Day Dividend are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Northern Lights and Freedom Day Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Northern Lights and Freedom Day

The main advantage of trading using opposite Northern Lights and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.
The idea behind Northern Lights and Freedom Day Dividend pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 CEOs Directory module to screen CEOs from public companies around the world.

Other Complementary Tools

Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets