Correlation Between Navigator Tactical and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Navigator Tactical and Northern Lights 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 Navigator Tactical and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Navigator Tactical Fixed and Northern Lights, you can compare the effects of market volatilities on Navigator Tactical and Northern Lights 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 Navigator Tactical with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navigator Tactical and Northern Lights.
Diversification Opportunities for Navigator Tactical and Northern Lights
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Navigator and Northern is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Tactical Fixed and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Navigator Tactical 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 Navigator Tactical Fixed are associated (or correlated) with Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Navigator Tactical i.e., Navigator Tactical and Northern Lights go up and down completely randomly.
Pair Corralation between Navigator Tactical and Northern Lights
Assuming the 90 days horizon Navigator Tactical is expected to generate 4.2 times less return on investment than Northern Lights. But when comparing it to its historical volatility, Navigator Tactical Fixed is 5.92 times less risky than Northern Lights. It trades about 0.19 of its potential returns per unit of risk. Northern Lights is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,171 in Northern Lights on August 27, 2024 and sell it today you would earn a total of 29.00 from holding Northern Lights or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Navigator Tactical Fixed vs. Northern Lights
Performance |
| Timeline |
| Navigator Tactical Fixed |
| Northern Lights |
Navigator Tactical and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Navigator Tactical and Northern Lights
The main advantage of trading using opposite Navigator Tactical and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navigator Tactical position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' long position.| Navigator Tactical vs. Northern Lights | Navigator Tactical vs. Navigator Tactical Investment | Navigator Tactical vs. Nuveen Infrastructure Income |
| Northern Lights vs. Navigator Tactical Fixed | Northern Lights vs. Navigator Tactical Investment | Northern Lights vs. Nuveen Infrastructure Income | Northern Lights vs. Voya Large Cap Growth |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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