Correlation Between Northern Lights and THE HILLMAN
Can any of the company-specific risk be diversified away by investing in both Northern Lights and THE HILLMAN 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 THE HILLMAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and THE HILLMAN FUND, you can compare the effects of market volatilities on Northern Lights and THE HILLMAN 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 THE HILLMAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and THE HILLMAN.
Diversification Opportunities for Northern Lights and THE HILLMAN
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and THE is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and THE HILLMAN FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THE HILLMAN FUND 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 THE HILLMAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THE HILLMAN FUND has no effect on the direction of Northern Lights i.e., Northern Lights and THE HILLMAN go up and down completely randomly.
Pair Corralation between Northern Lights and THE HILLMAN
Given the investment horizon of 90 days Northern Lights is expected to generate 1.01 times more return on investment than THE HILLMAN. However, Northern Lights is 1.01 times more volatile than THE HILLMAN FUND. It trades about 0.13 of its potential returns per unit of risk. THE HILLMAN FUND is currently generating about 0.06 per unit of risk. If you would invest 2,816 in Northern Lights on September 3, 2024 and sell it today you would earn a total of 779.00 from holding Northern Lights or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. THE HILLMAN FUND
Performance |
| Timeline |
| Northern Lights |
| THE HILLMAN FUND |
Northern Lights and THE HILLMAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and THE HILLMAN
The main advantage of trading using opposite Northern Lights and THE HILLMAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, THE HILLMAN 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 THE HILLMAN will offset losses from the drop in THE HILLMAN'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 |
| THE HILLMAN vs. FT Vest Equity | THE HILLMAN vs. Zillow Group Class | THE HILLMAN vs. Northern Lights | THE HILLMAN 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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