Correlation Between Northern Lights and Themes Cash
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Themes Cash 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 Themes Cash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Themes Cash Flow, you can compare the effects of market volatilities on Northern Lights and Themes Cash 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 Themes Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Themes Cash.
Diversification Opportunities for Northern Lights and Themes Cash
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and Themes is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Themes Cash Flow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Cash Flow 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 Themes Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Cash Flow has no effect on the direction of Northern Lights i.e., Northern Lights and Themes Cash go up and down completely randomly.
Pair Corralation between Northern Lights and Themes Cash
Given the investment horizon of 90 days Northern Lights is expected to generate 1.18 times more return on investment than Themes Cash. However, Northern Lights is 1.18 times more volatile than Themes Cash Flow. It trades about 0.11 of its potential returns per unit of risk. Themes Cash Flow is currently generating about -0.15 per unit of risk. If you would invest 3,567 in Northern Lights on September 13, 2024 and sell it today you would earn a total of 51.00 from holding Northern Lights or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Northern Lights vs. Themes Cash Flow
Performance |
| Timeline |
| Northern Lights |
| Themes Cash Flow |
Northern Lights and Themes Cash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Themes Cash
The main advantage of trading using opposite Northern Lights and Themes Cash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Themes Cash 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 Themes Cash will offset losses from the drop in Themes Cash'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 |
| Themes Cash vs. FT Vest Equity | Themes Cash vs. Northern Lights | Themes Cash vs. Dimensional International High | Themes Cash vs. JPMorgan Fundamental Data |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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