Correlation Between Northern Lights and Popular Income
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Popular Income 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 Popular Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Popular Income Plus, you can compare the effects of market volatilities on Northern Lights and Popular Income 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 Popular Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Popular Income.
Diversification Opportunities for Northern Lights and Popular Income
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and Popular is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Popular Income Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular Income Plus 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 Popular Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular Income Plus has no effect on the direction of Northern Lights i.e., Northern Lights and Popular Income go up and down completely randomly.
Pair Corralation between Northern Lights and Popular Income
Given the investment horizon of 90 days Northern Lights is expected to generate 1.95 times more return on investment than Popular Income. However, Northern Lights is 1.95 times more volatile than Popular Income Plus. It trades about 0.11 of its potential returns per unit of risk. Popular Income Plus is currently generating about 0.02 per unit of risk. If you would invest 2,368 in Northern Lights on September 14, 2024 and sell it today you would earn a total of 1,208 from holding Northern Lights or generate 51.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Northern Lights vs. Popular Income Plus
Performance |
| Timeline |
| Northern Lights |
| Popular Income Plus |
Northern Lights and Popular Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Popular Income
The main advantage of trading using opposite Northern Lights and Popular Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Popular Income 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 Popular Income will offset losses from the drop in Popular Income's long position.| Northern Lights vs. iShares Factors Growth | Northern Lights vs. Absolute Core Strategy | Northern Lights vs. iShares ESG Advanced | Northern Lights vs. PIMCO RAFI Dynamic |
| Popular Income vs. Popular Income Plus | Popular Income vs. FT Vest Equity | Popular Income vs. Zillow Group Class | Popular Income vs. Northern Lights |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |