Correlation Between Grandeur Peak and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Grandeur Peak 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 Grandeur Peak and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grandeur Peak Stalwarts and Northern Lights, you can compare the effects of market volatilities on Grandeur Peak 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 Grandeur Peak with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grandeur Peak and Northern Lights.
Diversification Opportunities for Grandeur Peak and Northern Lights
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grandeur and Northern is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Grandeur Peak Stalwarts and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Grandeur Peak 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 Grandeur Peak Stalwarts 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 Grandeur Peak i.e., Grandeur Peak and Northern Lights go up and down completely randomly.
Pair Corralation between Grandeur Peak and Northern Lights
Assuming the 90 days horizon Grandeur Peak is expected to generate 1.19 times less return on investment than Northern Lights. In addition to that, Grandeur Peak is 1.55 times more volatile than Northern Lights. It trades about 0.07 of its total potential returns per unit of risk. Northern Lights is currently generating about 0.14 per unit of volatility. If you would invest 2,812 in Northern Lights on September 2, 2024 and sell it today you would earn a total of 783.00 from holding Northern Lights or generate 27.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grandeur Peak Stalwarts vs. Northern Lights
Performance |
| Timeline |
| Grandeur Peak Stalwarts |
| Northern Lights |
Grandeur Peak and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grandeur Peak and Northern Lights
The main advantage of trading using opposite Grandeur Peak and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grandeur Peak 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.| Grandeur Peak vs. Grandeur Peak Global | Grandeur Peak vs. FT Vest Equity | Grandeur Peak vs. Zillow Group Class | Grandeur Peak vs. Northern Lights |
| Northern Lights vs. Sterling Capital Focus | Northern Lights vs. Roundhill ETF Trust | Northern Lights vs. Northern Lights | Northern Lights vs. First Trust 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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