Correlation Between Northern Lights and Roundhill Investments
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Roundhill Investments 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 Roundhill Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Roundhill Investments, you can compare the effects of market volatilities on Northern Lights and Roundhill Investments 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 Roundhill Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Roundhill Investments.
Diversification Opportunities for Northern Lights and Roundhill Investments
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Roundhill is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Roundhill Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Investments 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 Roundhill Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Investments has no effect on the direction of Northern Lights i.e., Northern Lights and Roundhill Investments go up and down completely randomly.
Pair Corralation between Northern Lights and Roundhill Investments
If you would invest 3,407 in Northern Lights on September 1, 2024 and sell it today you would earn a total of 188.00 from holding Northern Lights or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Northern Lights vs. Roundhill Investments
Performance |
| Timeline |
| Northern Lights |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Northern Lights and Roundhill Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Roundhill Investments
The main advantage of trading using opposite Northern Lights and Roundhill Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Roundhill Investments 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 Roundhill Investments will offset losses from the drop in Roundhill Investments' long position.| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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