Correlation Between Northern Lights and AIM ETF
Can any of the company-specific risk be diversified away by investing in both Northern Lights and AIM ETF 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 AIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and AIM ETF Products, you can compare the effects of market volatilities on Northern Lights and AIM ETF 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 AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and AIM ETF.
Diversification Opportunities for Northern Lights and AIM ETF
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and AIM is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products 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 AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Northern Lights i.e., Northern Lights and AIM ETF go up and down completely randomly.
Pair Corralation between Northern Lights and AIM ETF
Given the investment horizon of 90 days Northern Lights is expected to generate 2.06 times more return on investment than AIM ETF. However, Northern Lights is 2.06 times more volatile than AIM ETF Products. It trades about 0.1 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.14 per unit of risk. If you would invest 2,404 in Northern Lights on August 25, 2024 and sell it today you would earn a total of 1,159 from holding Northern Lights or generate 48.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 37.63% |
| Values | Daily Returns |
Northern Lights vs. AIM ETF Products
Performance |
| Timeline |
| Northern Lights |
| AIM ETF Products |
Northern Lights and AIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and AIM ETF
The main advantage of trading using opposite Northern Lights and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, AIM ETF 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 AIM ETF will offset losses from the drop in AIM ETF'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 |
| AIM ETF vs. FT Vest Equity | AIM ETF vs. Northern Lights | AIM ETF vs. Dimensional International High | AIM ETF vs. First Trust Exchange Traded |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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