Correlation Between Pacer Nasdaq and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Pacer Nasdaq 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 Pacer Nasdaq and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Nasdaq International and Northern Lights, you can compare the effects of market volatilities on Pacer Nasdaq 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 Pacer Nasdaq with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Nasdaq and Northern Lights.
Diversification Opportunities for Pacer Nasdaq and Northern Lights
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pacer and Northern is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Nasdaq International and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Pacer Nasdaq 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 Pacer Nasdaq International 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 Pacer Nasdaq i.e., Pacer Nasdaq and Northern Lights go up and down completely randomly.
Pair Corralation between Pacer Nasdaq and Northern Lights
Given the investment horizon of 90 days Pacer Nasdaq International is expected to under-perform the Northern Lights. In addition to that, Pacer Nasdaq is 1.28 times more volatile than Northern Lights. It trades about -0.22 of its total potential returns per unit of risk. Northern Lights is currently generating about 0.2 per unit of volatility. If you would invest 3,461 in Northern Lights on August 30, 2024 and sell it today you would earn a total of 113.00 from holding Northern Lights or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pacer Nasdaq International vs. Northern Lights
Performance |
| Timeline |
| Pacer Nasdaq Interna |
| Northern Lights |
Pacer Nasdaq and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Nasdaq and Northern Lights
The main advantage of trading using opposite Pacer Nasdaq and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Nasdaq 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.| Pacer Nasdaq vs. Invesco Actively Managed | Pacer Nasdaq vs. iShares Trust | Pacer Nasdaq vs. Xtrackers MSCI Emerging | Pacer Nasdaq vs. iShares MSCI Emerging |
| Northern Lights vs. iShares MSCI USA | Northern Lights vs. iShares MSCI USA | Northern Lights vs. iShares MSCI USA | Northern Lights vs. iShares Expanded Tech Software |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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