Correlation Between Northern Lights and BlackRock Long
Can any of the company-specific risk be diversified away by investing in both Northern Lights and BlackRock Long 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 BlackRock Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and BlackRock Long Term Equity, you can compare the effects of market volatilities on Northern Lights and BlackRock Long 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 BlackRock Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and BlackRock Long.
Diversification Opportunities for Northern Lights and BlackRock Long
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and BlackRock is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and BlackRock Long Term Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Long Term 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 BlackRock Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Long Term has no effect on the direction of Northern Lights i.e., Northern Lights and BlackRock Long go up and down completely randomly.
Pair Corralation between Northern Lights and BlackRock Long
Given the investment horizon of 90 days Northern Lights is expected to generate 0.73 times more return on investment than BlackRock Long. However, Northern Lights is 1.38 times less risky than BlackRock Long. It trades about 0.12 of its potential returns per unit of risk. BlackRock Long Term Equity is currently generating about 0.03 per unit of risk. If you would invest 2,348 in Northern Lights on September 12, 2024 and sell it today you would earn a total of 1,284 from holding Northern Lights or generate 54.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 24.65% |
| Values | Daily Returns |
Northern Lights vs. BlackRock Long Term Equity
Performance |
| Timeline |
| Northern Lights |
| BlackRock Long Term |
Northern Lights and BlackRock Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and BlackRock Long
The main advantage of trading using opposite Northern Lights and BlackRock Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, BlackRock Long 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 BlackRock Long will offset losses from the drop in BlackRock Long's long position.| Northern Lights vs. iShares Factors Growth | Northern Lights vs. Absolute Core Strategy | Northern Lights vs. iShares ESG Advanced | Northern Lights vs. PIMCO RAFI Dynamic |
| BlackRock Long vs. FT Vest Equity | BlackRock Long vs. Northern Lights | BlackRock Long vs. Dimensional International High | BlackRock Long vs. JPMorgan Fundamental Data |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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