Correlation Between Northern Lights and ProShares UltraPro
Can any of the company-specific risk be diversified away by investing in both Northern Lights and ProShares UltraPro 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 UltraPro 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 UltraPro Short, you can compare the effects of market volatilities on Northern Lights and ProShares UltraPro 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 UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and ProShares UltraPro.
Diversification Opportunities for Northern Lights and ProShares UltraPro
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Northern and ProShares is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short 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 UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of Northern Lights i.e., Northern Lights and ProShares UltraPro go up and down completely randomly.
Pair Corralation between Northern Lights and ProShares UltraPro
Given the investment horizon of 90 days Northern Lights is expected to generate 0.17 times more return on investment than ProShares UltraPro. However, Northern Lights is 5.74 times less risky than ProShares UltraPro. It trades about 0.16 of its potential returns per unit of risk. ProShares UltraPro Short is currently generating about -0.14 per unit of risk. If you would invest 3,407 in Northern Lights on September 12, 2024 and sell it today you would earn a total of 225.00 from holding Northern Lights or generate 6.6% 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 UltraPro Short
Performance |
| Timeline |
| Northern Lights |
| ProShares UltraPro Short |
Northern Lights and ProShares UltraPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and ProShares UltraPro
The main advantage of trading using opposite Northern Lights and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, ProShares UltraPro 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 UltraPro will offset losses from the drop in ProShares UltraPro'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 |
| ProShares UltraPro vs. ProShares UltraShort MSCI | ProShares UltraPro vs. ProShares UltraShort MSCI | ProShares UltraPro vs. ProShares UltraShort Euro | ProShares UltraPro vs. ProShares UltraShort MSCI |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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