Correlation Between Northern Lights and Simplify Exchange
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Simplify Exchange 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 Simplify Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Simplify Exchange Traded, you can compare the effects of market volatilities on Northern Lights and Simplify Exchange 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 Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Simplify Exchange.
Diversification Opportunities for Northern Lights and Simplify Exchange
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and Simplify is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded 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 Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of Northern Lights i.e., Northern Lights and Simplify Exchange go up and down completely randomly.
Pair Corralation between Northern Lights and Simplify Exchange
Given the investment horizon of 90 days Northern Lights is expected to generate 1.89 times less return on investment than Simplify Exchange. But when comparing it to its historical volatility, Northern Lights is 1.14 times less risky than Simplify Exchange. It trades about 0.08 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,482 in Simplify Exchange Traded on August 31, 2024 and sell it today you would earn a total of 762.20 from holding Simplify Exchange Traded or generate 30.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 70.72% |
| Values | Daily Returns |
Northern Lights vs. Simplify Exchange Traded
Performance |
| Timeline |
| Northern Lights |
| Simplify Exchange Traded |
Northern Lights and Simplify Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Simplify Exchange
The main advantage of trading using opposite Northern Lights and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Simplify Exchange 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 Simplify Exchange will offset losses from the drop in Simplify Exchange's long position.| Northern Lights vs. EA Series Trust | Northern Lights vs. Northern Lights | Northern Lights vs. Northern Lights | Northern Lights vs. Ned Davis Research |
| Simplify Exchange vs. Vanguard Total Stock | Simplify Exchange vs. SPDR SP 500 | Simplify Exchange vs. iShares Core SP | Simplify Exchange vs. Vanguard Dividend Appreciation |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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