Correlation Between Northern Lights and Pacer Swan
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Pacer Swan 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 Pacer Swan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Pacer Swan SOS, you can compare the effects of market volatilities on Northern Lights and Pacer Swan 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 Pacer Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Pacer Swan.
Diversification Opportunities for Northern Lights and Pacer Swan
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Pacer is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Pacer Swan SOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Swan SOS 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 Pacer Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Swan SOS has no effect on the direction of Northern Lights i.e., Northern Lights and Pacer Swan go up and down completely randomly.
Pair Corralation between Northern Lights and Pacer Swan
Given the investment horizon of 90 days Northern Lights is expected to generate 1.82 times more return on investment than Pacer Swan. However, Northern Lights is 1.82 times more volatile than Pacer Swan SOS. It trades about 0.2 of its potential returns per unit of risk. Pacer Swan SOS is currently generating about 0.16 per unit of risk. If you would invest 3,461 in Northern Lights on August 30, 2024 and sell it today you would earn a total of 113.00 from holding Northern Lights or generate 3.26% 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. Pacer Swan SOS
Performance |
| Timeline |
| Northern Lights |
| Pacer Swan SOS |
Northern Lights and Pacer Swan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Pacer Swan
The main advantage of trading using opposite Northern Lights and Pacer Swan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Pacer Swan 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 Pacer Swan will offset losses from the drop in Pacer Swan's long position.| Northern Lights vs. iShares MSCI USA | Northern Lights vs. iShares MSCI USA | Northern Lights vs. iShares MSCI USA | Northern Lights vs. iShares Expanded Tech Software |
| Pacer Swan vs. ABIVAX Socit Anonyme | Pacer Swan vs. Pinnacle Sherman Multi Strategy | Pacer Swan vs. Morningstar Unconstrained Allocation | Pacer Swan vs. SPACE |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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