Correlation Between Northern Lights and Lithium Boron
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Lithium Boron 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 Lithium Boron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Lithium Boron Technology, you can compare the effects of market volatilities on Northern Lights and Lithium Boron 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 Lithium Boron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Lithium Boron.
Diversification Opportunities for Northern Lights and Lithium Boron
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and Lithium is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Lithium Boron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Boron Technology 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 Lithium Boron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Boron Technology has no effect on the direction of Northern Lights i.e., Northern Lights and Lithium Boron go up and down completely randomly.
Pair Corralation between Northern Lights and Lithium Boron
Given the investment horizon of 90 days Northern Lights is expected to generate 1.09 times more return on investment than Lithium Boron. However, Northern Lights is 1.09 times more volatile than Lithium Boron Technology. It trades about 0.15 of its potential returns per unit of risk. Lithium Boron Technology is currently generating about -0.07 per unit of risk. If you would invest 3,466 in Northern Lights on August 24, 2024 and sell it today you would earn a total of 86.00 from holding Northern Lights or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Lithium Boron Technology
Performance |
| Timeline |
| Northern Lights |
| Lithium Boron Technology |
Northern Lights and Lithium Boron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Lithium Boron
The main advantage of trading using opposite Northern Lights and Lithium Boron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Lithium Boron 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 Lithium Boron will offset losses from the drop in Lithium Boron'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 |
| Lithium Boron vs. First Trust Exchange Traded | Lithium Boron vs. First Trust Exchange Traded | Lithium Boron vs. Northern Lights | Lithium Boron vs. First Trust Exchange Traded |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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