Correlation Between Northern Lights and EnCore Energy
Can any of the company-specific risk be diversified away by investing in both Northern Lights and EnCore Energy 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 EnCore Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and enCore Energy Corp, you can compare the effects of market volatilities on Northern Lights and EnCore Energy 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 EnCore Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and EnCore Energy.
Diversification Opportunities for Northern Lights and EnCore Energy
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and EnCore is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and enCore Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enCore Energy Corp 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 EnCore Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enCore Energy Corp has no effect on the direction of Northern Lights i.e., Northern Lights and EnCore Energy go up and down completely randomly.
Pair Corralation between Northern Lights and EnCore Energy
Given the investment horizon of 90 days Northern Lights is expected to generate 0.21 times more return on investment than EnCore Energy. However, Northern Lights is 4.66 times less risky than EnCore Energy. It trades about 0.13 of its potential returns per unit of risk. enCore Energy Corp is currently generating about -0.03 per unit of risk. If you would invest 3,189 in Northern Lights on September 1, 2024 and sell it today you would earn a total of 406.00 from holding Northern Lights or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. enCore Energy Corp
Performance |
| Timeline |
| Northern Lights |
| enCore Energy Corp |
Northern Lights and EnCore Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and EnCore Energy
The main advantage of trading using opposite Northern Lights and EnCore Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, EnCore Energy 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 EnCore Energy will offset losses from the drop in EnCore Energy's 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 |
| EnCore Energy vs. Ero Copper Corp | EnCore Energy vs. FT Vest Equity | EnCore Energy vs. Zillow Group Class | EnCore Energy vs. Northern Lights |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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