Correlation Between Northern Lights and Vulcan Value
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Vulcan Value 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 Vulcan Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Vulcan Value Partners, you can compare the effects of market volatilities on Northern Lights and Vulcan Value 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 Vulcan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Vulcan Value.
Diversification Opportunities for Northern Lights and Vulcan Value
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Vulcan is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Vulcan Value Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Value Partners 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 Vulcan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Value Partners has no effect on the direction of Northern Lights i.e., Northern Lights and Vulcan Value go up and down completely randomly.
Pair Corralation between Northern Lights and Vulcan Value
Given the investment horizon of 90 days Northern Lights is expected to generate 1.26 times less return on investment than Vulcan Value. But when comparing it to its historical volatility, Northern Lights is 1.26 times less risky than Vulcan Value. It trades about 0.1 of its potential returns per unit of risk. Vulcan Value Partners is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,748 in Vulcan Value Partners on September 4, 2024 and sell it today you would earn a total of 1,122 from holding Vulcan Value Partners or generate 64.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Vulcan Value Partners
Performance |
| Timeline |
| Northern Lights |
| Vulcan Value Partners |
Northern Lights and Vulcan Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Vulcan Value
The main advantage of trading using opposite Northern Lights and Vulcan Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Vulcan Value 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 Vulcan Value will offset losses from the drop in Vulcan Value'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 |
| Vulcan Value vs. Vulcan Value Partners | Vulcan Value vs. FT Vest Equity | Vulcan Value vs. Zillow Group Class | Vulcan Value vs. Northern Lights |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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