Correlation Between Northern Lights and DTN
Can any of the company-specific risk be diversified away by investing in both Northern Lights and DTN 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 DTN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and DTN, you can compare the effects of market volatilities on Northern Lights and DTN 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 DTN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and DTN.
Diversification Opportunities for Northern Lights and DTN
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Northern and DTN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and DTN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTN 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 DTN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTN has no effect on the direction of Northern Lights i.e., Northern Lights and DTN go up and down completely randomly.
Pair Corralation between Northern Lights and DTN
If you would invest 2,520 in Northern Lights on November 28, 2024 and sell it today you would earn a total of 1,079 from holding Northern Lights or generate 42.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Northern Lights vs. DTN
Performance |
| Timeline |
| Northern Lights |
| DTN |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Northern Lights and DTN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and DTN
The main advantage of trading using opposite Northern Lights and DTN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, DTN 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 DTN will offset losses from the drop in DTN's long position.| Northern Lights vs. Sterling Capital Focus | Northern Lights vs. Northern Lights | Northern Lights vs. First Trust Exchange Traded | Northern Lights vs. Northern Lights |
| DTN vs. Direxion Daily Mid | DTN vs. Schwab International Equity | DTN vs. FT Vest Equity | DTN vs. Zillow Group Class |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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