Correlation Between VanEck Vectors and Northern Lights
Can any of the company-specific risk be diversified away by investing in both VanEck Vectors 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 VanEck Vectors and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Vectors ETF and Northern Lights, you can compare the effects of market volatilities on VanEck Vectors 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 VanEck Vectors with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Vectors and Northern Lights.
Diversification Opportunities for VanEck Vectors and Northern Lights
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VanEck and Northern is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors ETF and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and VanEck Vectors 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 VanEck Vectors 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 VanEck Vectors i.e., VanEck Vectors and Northern Lights go up and down completely randomly.
Pair Corralation between VanEck Vectors and Northern Lights
Considering the 90-day investment horizon VanEck Vectors is expected to generate 1.31 times less return on investment than Northern Lights. In addition to that, VanEck Vectors is 1.83 times more volatile than Northern Lights. It trades about 0.1 of its total potential returns per unit of risk. Northern Lights is currently generating about 0.24 per unit of volatility. If you would invest 2,555 in Northern Lights on August 29, 2024 and sell it today you would earn a total of 28.00 from holding Northern Lights or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Vectors ETF vs. Northern Lights
Performance |
| Timeline |
| VanEck Vectors ETF |
| Northern Lights |
VanEck Vectors and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Vectors and Northern Lights
The main advantage of trading using opposite VanEck Vectors and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Vectors 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.| VanEck Vectors vs. Formidable Fortress ETF | VanEck Vectors vs. Sonida Senior Living | VanEck Vectors vs. China Yuchai International | VanEck Vectors vs. Nine Energy Service |
| Northern Lights vs. Vanguard Total Stock | Northern Lights vs. SPDR SP 500 | Northern Lights vs. iShares Core SP | Northern Lights vs. Vanguard Total Bond |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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