Correlation Between Northern Lights and Cref Money
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Cref Money 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 Cref Money into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Cref Money Market, you can compare the effects of market volatilities on Northern Lights and Cref Money 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 Cref Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Cref Money.
Diversification Opportunities for Northern Lights and Cref Money
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and Cref is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Cref Money Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Money Market 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 Cref Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Money Market has no effect on the direction of Northern Lights i.e., Northern Lights and Cref Money go up and down completely randomly.
Pair Corralation between Northern Lights and Cref Money
Assuming the 90 days horizon Northern Lights is expected to generate 24.8 times more return on investment than Cref Money. However, Northern Lights is 24.8 times more volatile than Cref Money Market. It trades about 0.11 of its potential returns per unit of risk. Cref Money Market is currently generating about 0.8 per unit of risk. If you would invest 2,462 in Northern Lights on September 3, 2024 and sell it today you would earn a total of 528.00 from holding Northern Lights or generate 21.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.21% |
| Values | Daily Returns |
Northern Lights vs. Cref Money Market
Performance |
| Timeline |
| Northern Lights |
| Cref Money Market |
Northern Lights and Cref Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Cref Money
The main advantage of trading using opposite Northern Lights and Cref Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Cref Money 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 Cref Money will offset losses from the drop in Cref Money's long position.| Northern Lights vs. Quantex Fund Retail | Northern Lights vs. Infrastructure Fund Retail | Northern Lights vs. Dynamic Growth Fund | Northern Lights vs. Balanced Fund Retail |
| Cref Money vs. Health Biotchnology Portfolio | Cref Money vs. Health Biotchnology Portfolio | Cref Money vs. Lord Abbett Health | Cref Money vs. Allianzgi Health Sciences |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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