Correlation Between Northern Lights and Invesco Actively
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Invesco Actively 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 Invesco Actively into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Invesco Actively Managed, you can compare the effects of market volatilities on Northern Lights and Invesco Actively 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 Invesco Actively. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Invesco Actively.
Diversification Opportunities for Northern Lights and Invesco Actively
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Invesco is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Invesco Actively Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Actively Managed 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 Invesco Actively. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Actively Managed has no effect on the direction of Northern Lights i.e., Northern Lights and Invesco Actively go up and down completely randomly.
Pair Corralation between Northern Lights and Invesco Actively
Given the investment horizon of 90 days Northern Lights is expected to generate 1.23 times more return on investment than Invesco Actively. However, Northern Lights is 1.23 times more volatile than Invesco Actively Managed. It trades about 0.37 of its potential returns per unit of risk. Invesco Actively Managed is currently generating about 0.4 per unit of risk. If you would invest 3,407 in Northern Lights on September 1, 2024 and sell it today you would earn a total of 188.00 from holding Northern Lights or generate 5.52% 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. Invesco Actively Managed
Performance |
| Timeline |
| Northern Lights |
| Invesco Actively Managed |
Northern Lights and Invesco Actively Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Invesco Actively
The main advantage of trading using opposite Northern Lights and Invesco Actively positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Invesco Actively 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 Invesco Actively will offset losses from the drop in Invesco Actively'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 |
| Invesco Actively vs. FT Vest Equity | Invesco Actively vs. Northern Lights | Invesco Actively vs. Dimensional International High | Invesco Actively vs. Matthews China Discovery |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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