Correlation Between 6 Meridian and Northern Lights
Can any of the company-specific risk be diversified away by investing in both 6 Meridian 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 6 Meridian and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 6 Meridian Quality and Northern Lights, you can compare the effects of market volatilities on 6 Meridian 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 6 Meridian with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of 6 Meridian and Northern Lights.
Diversification Opportunities for 6 Meridian and Northern Lights
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SXQG and Northern is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding 6 Meridian Quality and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and 6 Meridian 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 6 Meridian Quality 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 6 Meridian i.e., 6 Meridian and Northern Lights go up and down completely randomly.
Pair Corralation between 6 Meridian and Northern Lights
Given the investment horizon of 90 days 6 Meridian Quality is expected to generate 1.35 times more return on investment than Northern Lights. However, 6 Meridian is 1.35 times more volatile than Northern Lights. It trades about 0.23 of its potential returns per unit of risk. Northern Lights is currently generating about 0.2 per unit of risk. If you would invest 3,093 in 6 Meridian Quality on August 26, 2024 and sell it today you would earn a total of 160.00 from holding 6 Meridian Quality or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
6 Meridian Quality vs. Northern Lights
Performance |
| Timeline |
| 6 Meridian Quality |
| Northern Lights |
6 Meridian and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 6 Meridian and Northern Lights
The main advantage of trading using opposite 6 Meridian and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 6 Meridian 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.| 6 Meridian vs. Invesco Dynamic Large | 6 Meridian vs. Perella Weinberg Partners | 6 Meridian vs. HUMANA INC | 6 Meridian vs. Aquagold International |
| Northern Lights vs. Invesco Dynamic Large | Northern Lights vs. Perella Weinberg Partners | Northern Lights vs. HUMANA INC | Northern Lights vs. Aquagold International |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |