Correlation Between Northern Lights and TrueShares Structured
Can any of the company-specific risk be diversified away by investing in both Northern Lights and TrueShares Structured 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 TrueShares Structured into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and TrueShares Structured Outcome, you can compare the effects of market volatilities on Northern Lights and TrueShares Structured 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 TrueShares Structured. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and TrueShares Structured.
Diversification Opportunities for Northern Lights and TrueShares Structured
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Northern and TrueShares is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and TrueShares Structured Outcome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueShares Structured 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 TrueShares Structured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueShares Structured has no effect on the direction of Northern Lights i.e., Northern Lights and TrueShares Structured go up and down completely randomly.
Pair Corralation between Northern Lights and TrueShares Structured
Considering the 90-day investment horizon Northern Lights is expected to generate 3.76 times less return on investment than TrueShares Structured. But when comparing it to its historical volatility, Northern Lights is 1.88 times less risky than TrueShares Structured. It trades about 0.05 of its potential returns per unit of risk. TrueShares Structured Outcome is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,906 in TrueShares Structured Outcome on August 26, 2024 and sell it today you would earn a total of 1,096 from holding TrueShares Structured Outcome or generate 37.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. TrueShares Structured Outcome
Performance |
| Timeline |
| Northern Lights |
| TrueShares Structured |
Northern Lights and TrueShares Structured Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and TrueShares Structured
The main advantage of trading using opposite Northern Lights and TrueShares Structured positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, TrueShares Structured 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 TrueShares Structured will offset losses from the drop in TrueShares Structured's long position.| Northern Lights vs. Northern Lights | Northern Lights vs. Innovator 20 Year | Northern Lights vs. Strategy Shares NewfoundReSolve | Northern Lights vs. Innovator SP 500 |
| TrueShares Structured vs. First Trust Cboe | TrueShares Structured vs. FT Cboe Vest | TrueShares Structured vs. Innovator SP 500 | TrueShares Structured vs. FT Cboe Vest |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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