Correlation Between Northern Lights and AB Active
Can any of the company-specific risk be diversified away by investing in both Northern Lights and AB Active 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 AB Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and AB Active ETFs,, you can compare the effects of market volatilities on Northern Lights and AB Active 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 AB Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and AB Active.
Diversification Opportunities for Northern Lights and AB Active
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northern and ILOW is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and AB Active ETFs, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Active ETFs, 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 AB Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Active ETFs, has no effect on the direction of Northern Lights i.e., Northern Lights and AB Active go up and down completely randomly.
Pair Corralation between Northern Lights and AB Active
Given the investment horizon of 90 days Northern Lights is expected to generate 1.01 times more return on investment than AB Active. However, Northern Lights is 1.01 times more volatile than AB Active ETFs,. It trades about 0.1 of its potential returns per unit of risk. AB Active ETFs, is currently generating about 0.03 per unit of risk. If you would invest 3,281 in Northern Lights on September 13, 2024 and sell it today you would earn a total of 337.01 from holding Northern Lights or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.4% |
| Values | Daily Returns |
Northern Lights vs. AB Active ETFs,
Performance |
| Timeline |
| Northern Lights |
| AB Active ETFs, |
Northern Lights and AB Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and AB Active
The main advantage of trading using opposite Northern Lights and AB Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, AB Active 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 AB Active will offset losses from the drop in AB Active's long position.| Northern Lights vs. Sterling Capital Focus | Northern Lights vs. Northern Lights | Northern Lights vs. First Trust Exchange Traded | Northern Lights vs. Northern Lights |
| AB Active vs. iShares MSCI Intl | AB Active vs. iShares MSCI Intl | AB Active vs. iShares Currency Hedged | AB Active vs. iShares Edge MSCI |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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