Correlation Between Perella Weinberg and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Perella Weinberg 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 Perella Weinberg and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perella Weinberg Partners and Northern Lights, you can compare the effects of market volatilities on Perella Weinberg 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 Perella Weinberg with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perella Weinberg and Northern Lights.
Diversification Opportunities for Perella Weinberg and Northern Lights
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Perella and Northern is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Perella Weinberg Partners and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Perella Weinberg 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 Perella Weinberg Partners 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 Perella Weinberg i.e., Perella Weinberg and Northern Lights go up and down completely randomly.
Pair Corralation between Perella Weinberg and Northern Lights
Considering the 90-day investment horizon Perella Weinberg Partners is expected to generate 3.08 times more return on investment than Northern Lights. However, Perella Weinberg is 3.08 times more volatile than Northern Lights. It trades about 0.14 of its potential returns per unit of risk. Northern Lights is currently generating about 0.12 per unit of risk. If you would invest 775.00 in Perella Weinberg Partners on August 30, 2024 and sell it today you would earn a total of 1,765 from holding Perella Weinberg Partners or generate 227.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.75% |
| Values | Daily Returns |
Perella Weinberg Partners vs. Northern Lights
Performance |
| Timeline |
| Perella Weinberg Partners |
| Northern Lights |
Perella Weinberg and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perella Weinberg and Northern Lights
The main advantage of trading using opposite Perella Weinberg and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perella Weinberg 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.| Perella Weinberg vs. Evercore Partners | Perella Weinberg vs. Lazard | Perella Weinberg vs. Piper Sandler Companies | Perella Weinberg vs. Moelis Co |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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