Correlation Between Northern Lights and IQ Winslow
Can any of the company-specific risk be diversified away by investing in both Northern Lights and IQ Winslow 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 IQ Winslow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and IQ Winslow Focused, you can compare the effects of market volatilities on Northern Lights and IQ Winslow 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 IQ Winslow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and IQ Winslow.
Diversification Opportunities for Northern Lights and IQ Winslow
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and IWFG is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and IQ Winslow Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Winslow Focused 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 IQ Winslow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Winslow Focused has no effect on the direction of Northern Lights i.e., Northern Lights and IQ Winslow go up and down completely randomly.
Pair Corralation between Northern Lights and IQ Winslow
Given the investment horizon of 90 days Northern Lights is expected to generate 1.45 times less return on investment than IQ Winslow. But when comparing it to its historical volatility, Northern Lights is 1.35 times less risky than IQ Winslow. It trades about 0.1 of its potential returns per unit of risk. IQ Winslow Focused is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,787 in IQ Winslow Focused on September 3, 2024 and sell it today you would earn a total of 2,122 from holding IQ Winslow Focused or generate 76.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. IQ Winslow Focused
Performance |
| Timeline |
| Northern Lights |
| IQ Winslow Focused |
Northern Lights and IQ Winslow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and IQ Winslow
The main advantage of trading using opposite Northern Lights and IQ Winslow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, IQ Winslow 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 IQ Winslow will offset losses from the drop in IQ Winslow'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 |
| IQ Winslow vs. FT Vest Equity | IQ Winslow vs. Northern Lights | IQ Winslow vs. Dimensional International High | IQ Winslow vs. JPMorgan Fundamental Data |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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