Correlation Between Janus Detroit and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Janus Detroit 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 Janus Detroit and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Janus Detroit Street and Northern Lights, you can compare the effects of market volatilities on Janus Detroit 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 Janus Detroit with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Detroit and Northern Lights.
Diversification Opportunities for Janus Detroit and Northern Lights
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Janus and Northern is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Janus Detroit Street and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Janus Detroit 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 Janus Detroit Street 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 Janus Detroit i.e., Janus Detroit and Northern Lights go up and down completely randomly.
Pair Corralation between Janus Detroit and Northern Lights
Given the investment horizon of 90 days Janus Detroit is expected to generate 2.37 times less return on investment than Northern Lights. But when comparing it to its historical volatility, Janus Detroit Street is 16.58 times less risky than Northern Lights. It trades about 0.61 of its potential returns per unit of risk. Northern Lights is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,523 in Northern Lights on August 26, 2024 and sell it today you would earn a total of 465.00 from holding Northern Lights or generate 18.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Janus Detroit Street vs. Northern Lights
Performance |
| Timeline |
| Janus Detroit Street |
| Northern Lights |
Janus Detroit and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Janus Detroit and Northern Lights
The main advantage of trading using opposite Janus Detroit and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janus Detroit 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.| Janus Detroit vs. First Trust Low | Janus Detroit vs. First Trust Senior | Janus Detroit vs. First Trust TCW | Janus Detroit vs. First Trust Tactical |
| Northern Lights vs. Ocean Park International | Northern Lights vs. Northern Lights | Northern Lights vs. Northern Lights | Northern Lights vs. Ned Davis Research |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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