Correlation Between Northern Lights and JPMorgan Global
Can any of the company-specific risk be diversified away by investing in both Northern Lights and JPMorgan Global 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 JPMorgan Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and JPMorgan Global Select, you can compare the effects of market volatilities on Northern Lights and JPMorgan Global 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 JPMorgan Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and JPMorgan Global.
Diversification Opportunities for Northern Lights and JPMorgan Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and JPMorgan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and JPMorgan Global Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Global Select 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 JPMorgan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Global Select has no effect on the direction of Northern Lights i.e., Northern Lights and JPMorgan Global go up and down completely randomly.
Pair Corralation between Northern Lights and JPMorgan Global
Given the investment horizon of 90 days Northern Lights is expected to generate 1.11 times more return on investment than JPMorgan Global. However, Northern Lights is 1.11 times more volatile than JPMorgan Global Select. It trades about 0.35 of its potential returns per unit of risk. JPMorgan Global Select is currently generating about 0.25 per unit of risk. If you would invest 3,426 in Northern Lights on September 3, 2024 and sell it today you would earn a total of 169.00 from holding Northern Lights or generate 4.93% 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. JPMorgan Global Select
Performance |
| Timeline |
| Northern Lights |
| JPMorgan Global Select |
Northern Lights and JPMorgan Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and JPMorgan Global
The main advantage of trading using opposite Northern Lights and JPMorgan Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, JPMorgan Global 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 JPMorgan Global will offset losses from the drop in JPMorgan Global'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 |
| JPMorgan Global vs. FT Vest Equity | JPMorgan Global vs. Northern Lights | JPMorgan Global vs. Dimensional International High | JPMorgan Global 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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