Correlation Between Northern Lights and Cullen International
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Cullen International 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 Northern Lights and Cullen International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Cullen International High, you can compare the effects of market volatilities on Northern Lights and Cullen International 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 Northern Lights with a short position of Cullen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Cullen International.
Diversification Opportunities for Northern Lights and Cullen International
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northern and Cullen is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Cullen International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen International High and Northern Lights 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 Northern Lights are associated (or correlated) with Cullen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen International High has no effect on the direction of Northern Lights i.e., Northern Lights and Cullen International go up and down completely randomly.
Pair Corralation between Northern Lights and Cullen International
Assuming the 90 days horizon Northern Lights is expected to generate 0.91 times more return on investment than Cullen International. However, Northern Lights is 1.09 times less risky than Cullen International. It trades about 0.39 of its potential returns per unit of risk. Cullen International High is currently generating about -0.01 per unit of risk. If you would invest 2,842 in Northern Lights on September 1, 2024 and sell it today you would earn a total of 153.00 from holding Northern Lights or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Cullen International High
Performance |
| Timeline |
| Northern Lights |
| Cullen International High |
Northern Lights and Cullen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Cullen International
The main advantage of trading using opposite Northern Lights and Cullen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Cullen International 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 Cullen International will offset losses from the drop in Cullen International's long position.| Northern Lights vs. Sierra Tactical Risk | Northern Lights vs. Sierra Tactical Risk | Northern Lights vs. Sierra Strategic Income | Northern Lights vs. Sierra Tactical Bond |
| Cullen International vs. Cullen Small Cap | Cullen International vs. Cullen Small Cap | Cullen International vs. Cullen Small Cap | Cullen International vs. Cullen Value Fund |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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