Correlation Between Exchange Traded and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Exchange Traded 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 Exchange Traded and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Traded Concepts and Northern Lights, you can compare the effects of market volatilities on Exchange Traded 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 Exchange Traded with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Traded and Northern Lights.
Diversification Opportunities for Exchange Traded and Northern Lights
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exchange and Northern is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Traded Concepts and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Exchange Traded 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 Exchange Traded Concepts 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 Exchange Traded i.e., Exchange Traded and Northern Lights go up and down completely randomly.
Pair Corralation between Exchange Traded and Northern Lights
If you would invest 2,762 in Northern Lights on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Northern Lights or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 4.55% |
Values | Daily Returns |
Exchange Traded Concepts vs. Northern Lights
Performance |
Timeline |
Exchange Traded Concepts |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Northern Lights |
Exchange Traded and Northern Lights Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exchange Traded and Northern Lights
The main advantage of trading using opposite Exchange Traded and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Traded 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.Exchange Traded vs. FT Cboe Vest | Exchange Traded vs. First Trust Exchange Traded | Exchange Traded vs. FT Cboe Vest | Exchange Traded vs. Anfield Equity Sector |
Northern Lights vs. FT Cboe Vest | Northern Lights vs. First Trust Exchange Traded | Northern Lights vs. FT Cboe Vest | Northern Lights vs. Anfield Equity Sector |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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