Correlation Between ClearShares OCIO and Northern Lights
Can any of the company-specific risk be diversified away by investing in both ClearShares OCIO 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 ClearShares OCIO and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ClearShares OCIO ETF and Northern Lights, you can compare the effects of market volatilities on ClearShares OCIO 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 ClearShares OCIO with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearShares OCIO and Northern Lights.
Diversification Opportunities for ClearShares OCIO and Northern Lights
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ClearShares and Northern is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares OCIO ETF and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and ClearShares OCIO 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 ClearShares OCIO ETF 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 ClearShares OCIO i.e., ClearShares OCIO and Northern Lights go up and down completely randomly.
Pair Corralation between ClearShares OCIO and Northern Lights
Given the investment horizon of 90 days ClearShares OCIO ETF is expected to generate about the same return on investment as Northern Lights. But, ClearShares OCIO ETF is 1.35 times less risky than Northern Lights. It trades about 0.08 of its potential returns per unit of risk. Northern Lights is currently generating about 0.06 per unit of risk. If you would invest 2,488 in Northern Lights on November 28, 2024 and sell it today you would earn a total of 221.00 from holding Northern Lights or generate 8.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.91% |
| Values | Daily Returns |
ClearShares OCIO ETF vs. Northern Lights
Performance |
| Timeline |
| ClearShares OCIO ETF |
| Northern Lights |
ClearShares OCIO and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ClearShares OCIO and Northern Lights
The main advantage of trading using opposite ClearShares OCIO and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearShares OCIO 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.| ClearShares OCIO vs. ClearShares Ultra Short Maturity | ClearShares OCIO vs. Opus Small Cap | ClearShares OCIO vs. SPDR SSgA Income |
| Northern Lights vs. Strategy Shares | Northern Lights vs. Freedom Day Dividend | Northern Lights vs. Franklin Templeton ETF | Northern Lights vs. iShares MSCI China |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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