Correlation Between Northern Lights and Grandeur Peak
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Grandeur Peak 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 Grandeur Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Grandeur Peak Stalwarts, you can compare the effects of market volatilities on Northern Lights and Grandeur Peak 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 Grandeur Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Grandeur Peak.
Diversification Opportunities for Northern Lights and Grandeur Peak
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Grandeur is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Grandeur Peak Stalwarts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandeur Peak Stalwarts 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 Grandeur Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandeur Peak Stalwarts has no effect on the direction of Northern Lights i.e., Northern Lights and Grandeur Peak go up and down completely randomly.
Pair Corralation between Northern Lights and Grandeur Peak
Given the investment horizon of 90 days Northern Lights is expected to generate 2.61 times less return on investment than Grandeur Peak. But when comparing it to its historical volatility, Northern Lights is 1.59 times less risky than Grandeur Peak. It trades about 0.09 of its potential returns per unit of risk. Grandeur Peak Stalwarts is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,988 in Grandeur Peak Stalwarts on August 31, 2024 and sell it today you would earn a total of 142.00 from holding Grandeur Peak Stalwarts or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.78% |
| Values | Daily Returns |
Northern Lights vs. Grandeur Peak Stalwarts
Performance |
| Timeline |
| Northern Lights |
| Grandeur Peak Stalwarts |
Northern Lights and Grandeur Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Grandeur Peak
The main advantage of trading using opposite Northern Lights and Grandeur Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Grandeur Peak 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 Grandeur Peak will offset losses from the drop in Grandeur Peak'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 |
| Grandeur Peak vs. Vanguard Mid Cap Growth | Grandeur Peak vs. ARK Innovation ETF | Grandeur Peak vs. SPDR Kensho New | Grandeur Peak vs. SPDR SP 400 |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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