Correlation Between Northern Lights and Clarkston Founders
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Clarkston Founders 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 Clarkston Founders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Clarkston Founders, you can compare the effects of market volatilities on Northern Lights and Clarkston Founders 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 Clarkston Founders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Clarkston Founders.
Diversification Opportunities for Northern Lights and Clarkston Founders
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and Clarkston is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Clarkston Founders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkston Founders 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 Clarkston Founders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkston Founders has no effect on the direction of Northern Lights i.e., Northern Lights and Clarkston Founders go up and down completely randomly.
Pair Corralation between Northern Lights and Clarkston Founders
Given the investment horizon of 90 days Northern Lights is expected to generate 0.97 times more return on investment than Clarkston Founders. However, Northern Lights is 1.03 times less risky than Clarkston Founders. It trades about 0.11 of its potential returns per unit of risk. Clarkston Founders is currently generating about 0.05 per unit of risk. If you would invest 2,717 in Northern Lights on August 26, 2024 and sell it today you would earn a total of 846.00 from holding Northern Lights or generate 31.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Clarkston Founders
Performance |
| Timeline |
| Northern Lights |
| Clarkston Founders |
Northern Lights and Clarkston Founders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Clarkston Founders
The main advantage of trading using opposite Northern Lights and Clarkston Founders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Clarkston Founders 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 Clarkston Founders will offset losses from the drop in Clarkston Founders' 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 |
| Clarkston Founders vs. FT Vest Equity | Clarkston Founders vs. Zillow Group Class | Clarkston Founders vs. Northern Lights | Clarkston Founders vs. VanEck Vectors Moodys |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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