Correlation Between Northern Lights and Fidelity Dynamic
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Fidelity Dynamic 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 Fidelity Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Fidelity Dynamic Buffered, you can compare the effects of market volatilities on Northern Lights and Fidelity Dynamic 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 Fidelity Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Fidelity Dynamic.
Diversification Opportunities for Northern Lights and Fidelity Dynamic
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Fidelity is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Fidelity Dynamic Buffered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Dynamic Buffered 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 Fidelity Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Dynamic Buffered has no effect on the direction of Northern Lights i.e., Northern Lights and Fidelity Dynamic go up and down completely randomly.
Pair Corralation between Northern Lights and Fidelity Dynamic
Given the investment horizon of 90 days Northern Lights is expected to generate 1.27 times more return on investment than Fidelity Dynamic. However, Northern Lights is 1.27 times more volatile than Fidelity Dynamic Buffered. It trades about 0.37 of its potential returns per unit of risk. Fidelity Dynamic Buffered is currently generating about 0.33 per unit of risk. 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 Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Northern Lights vs. Fidelity Dynamic Buffered
Performance |
| Timeline |
| Northern Lights |
| Fidelity Dynamic Buffered |
Northern Lights and Fidelity Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Fidelity Dynamic
The main advantage of trading using opposite Northern Lights and Fidelity Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Fidelity Dynamic 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 Fidelity Dynamic will offset losses from the drop in Fidelity Dynamic'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 |
| Fidelity Dynamic vs. FT Vest Equity | Fidelity Dynamic vs. Northern Lights | Fidelity Dynamic vs. Dimensional International High | Fidelity Dynamic vs. Matthews China Discovery |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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