Correlation Between Northern Lights and ProShares Supply
Can any of the company-specific risk be diversified away by investing in both Northern Lights and ProShares Supply 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 Supply 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 Supply Chain, you can compare the effects of market volatilities on Northern Lights and ProShares Supply 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 Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and ProShares Supply.
Diversification Opportunities for Northern Lights and ProShares Supply
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and ProShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and ProShares Supply Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Supply Chain 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 Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Supply Chain has no effect on the direction of Northern Lights i.e., Northern Lights and ProShares Supply go up and down completely randomly.
Pair Corralation between Northern Lights and ProShares Supply
Given the investment horizon of 90 days Northern Lights is expected to generate 0.85 times more return on investment than ProShares Supply. However, Northern Lights is 1.18 times less risky than ProShares Supply. It trades about 0.1 of its potential returns per unit of risk. ProShares Supply Chain is currently generating about 0.05 per unit of risk. If you would invest 2,404 in Northern Lights on August 26, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. ProShares Supply Chain
Performance |
| Timeline |
| Northern Lights |
| ProShares Supply Chain |
Northern Lights and ProShares Supply Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and ProShares Supply
The main advantage of trading using opposite Northern Lights and ProShares Supply positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, ProShares Supply 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 Supply will offset losses from the drop in ProShares Supply's long position.| Northern Lights vs. Invesco Dynamic Large | Northern Lights vs. Perella Weinberg Partners | Northern Lights vs. HUMANA INC | Northern Lights vs. Aquagold International |
| ProShares Supply vs. SonicShares Global Shipping | ProShares Supply vs. ProShares Smart Materials | ProShares Supply vs. ProShares Metaverse ETF | ProShares Supply vs. ProShares SP Kensho |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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