Correlation Between Northern Lights and SGI Enhanced
Can any of the company-specific risk be diversified away by investing in both Northern Lights and SGI Enhanced 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 SGI Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and SGI Enhanced Nasdaq 100, you can compare the effects of market volatilities on Northern Lights and SGI Enhanced 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 SGI Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and SGI Enhanced.
Diversification Opportunities for Northern Lights and SGI Enhanced
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and SGI is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and SGI Enhanced Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGI Enhanced Nasdaq 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 SGI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGI Enhanced Nasdaq has no effect on the direction of Northern Lights i.e., Northern Lights and SGI Enhanced go up and down completely randomly.
Pair Corralation between Northern Lights and SGI Enhanced
Given the investment horizon of 90 days Northern Lights is expected to generate 2.6 times less return on investment than SGI Enhanced. But when comparing it to its historical volatility, Northern Lights is 2.49 times less risky than SGI Enhanced. It trades about 0.11 of its potential returns per unit of risk. SGI Enhanced Nasdaq 100 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,750 in SGI Enhanced Nasdaq 100 on September 13, 2024 and sell it today you would earn a total of 104.00 from holding SGI Enhanced Nasdaq 100 or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Northern Lights vs. SGI Enhanced Nasdaq 100
Performance |
| Timeline |
| Northern Lights |
| SGI Enhanced Nasdaq |
Northern Lights and SGI Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and SGI Enhanced
The main advantage of trading using opposite Northern Lights and SGI Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, SGI Enhanced 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 SGI Enhanced will offset losses from the drop in SGI Enhanced'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 |
| SGI Enhanced vs. Global X SP | SGI Enhanced vs. Amplify CWP Enhanced | SGI Enhanced vs. JPMorgan Nasdaq Equity | SGI Enhanced vs. NEOS ETF Trust |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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