Correlation Between Northern Lights and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Northern Lights and ProShares Short 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 ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and ProShares Short SP500, you can compare the effects of market volatilities on Northern Lights and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and ProShares Short.
Diversification Opportunities for Northern Lights and ProShares Short
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Northern and ProShares is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and ProShares Short SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short SP500 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short SP500 has no effect on the direction of Northern Lights i.e., Northern Lights and ProShares Short go up and down completely randomly.
Pair Corralation between Northern Lights and ProShares Short
Given the investment horizon of 90 days Northern Lights is expected to generate 0.99 times more return on investment than ProShares Short. However, Northern Lights is 1.01 times less risky than ProShares Short. It trades about 0.13 of its potential returns per unit of risk. ProShares Short SP500 is currently generating about -0.1 per unit of risk. If you would invest 2,808 in Northern Lights on August 25, 2024 and sell it today you would earn a total of 755.00 from holding Northern Lights or generate 26.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. ProShares Short SP500
Performance |
| Timeline |
| Northern Lights |
| ProShares Short SP500 |
Northern Lights and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and ProShares Short
The main advantage of trading using opposite Northern Lights and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short'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 |
| ProShares Short vs. ProShares Short QQQ | ProShares Short vs. ProShares Short Dow30 | ProShares Short vs. ProShares UltraShort SP500 | ProShares Short vs. ProShares Short Russell2000 |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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