Correlation Between IShares Broad and Northern Lights
Can any of the company-specific risk be diversified away by investing in both IShares Broad 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 IShares Broad and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Broad USD and Northern Lights, you can compare the effects of market volatilities on IShares Broad 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 IShares Broad with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Broad and Northern Lights.
Diversification Opportunities for IShares Broad and Northern Lights
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Northern is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Broad USD and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and IShares Broad 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 iShares Broad USD 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 IShares Broad i.e., IShares Broad and Northern Lights go up and down completely randomly.
Pair Corralation between IShares Broad and Northern Lights
Given the investment horizon of 90 days iShares Broad USD is expected to generate 0.94 times more return on investment than Northern Lights. However, iShares Broad USD is 1.07 times less risky than Northern Lights. It trades about -0.05 of its potential returns per unit of risk. Northern Lights is currently generating about -0.05 per unit of risk. If you would invest 5,106 in iShares Broad USD on August 26, 2024 and sell it today you would lose (21.00) from holding iShares Broad USD or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Broad USD vs. Northern Lights
Performance |
| Timeline |
| iShares Broad USD |
| Northern Lights |
IShares Broad and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Broad and Northern Lights
The main advantage of trading using opposite IShares Broad and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Broad 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.| IShares Broad vs. Senstar Technologies | IShares Broad vs. ImmuCell | IShares Broad vs. Anika Therapeutics | IShares Broad vs. Aquagold International |
| Northern Lights vs. Inspire SmallMid Cap | Northern Lights vs. Inspire Global Hope | Northern Lights vs. Northern Lights | Northern Lights vs. Inspire International ESG |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |