Correlation Between Northern Lights and Innovator Long
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Innovator Long 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 Innovator Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Innovator Long Term, you can compare the effects of market volatilities on Northern Lights and Innovator Long 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 Innovator Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Innovator Long.
Diversification Opportunities for Northern Lights and Innovator Long
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Northern and Innovator is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Innovator Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Long Term 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 Innovator Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Long Term has no effect on the direction of Northern Lights i.e., Northern Lights and Innovator Long go up and down completely randomly.
Pair Corralation between Northern Lights and Innovator Long
Considering the 90-day investment horizon Northern Lights is expected to generate 0.48 times more return on investment than Innovator Long. However, Northern Lights is 2.09 times less risky than Innovator Long. It trades about 0.05 of its potential returns per unit of risk. Innovator Long Term is currently generating about -0.01 per unit of risk. If you would invest 2,085 in Northern Lights on August 26, 2024 and sell it today you would earn a total of 185.00 from holding Northern Lights or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Innovator Long Term
Performance |
| Timeline |
| Northern Lights |
| Innovator Long Term |
Northern Lights and Innovator Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Innovator Long
The main advantage of trading using opposite Northern Lights and Innovator Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Innovator Long 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 Innovator Long will offset losses from the drop in Innovator Long'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 |
| Innovator Long vs. First Trust Cboe | Innovator Long vs. FT Cboe Vest | Innovator Long vs. Innovator SP 500 | Innovator Long 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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