Correlation Between VIIX and Northern Lights
Can any of the company-specific risk be diversified away by investing in both VIIX 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 VIIX and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIIX and Northern Lights, you can compare the effects of market volatilities on VIIX 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 VIIX with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIIX and Northern Lights.
Diversification Opportunities for VIIX and Northern Lights
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between VIIX and Northern is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding VIIX and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and VIIX 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 VIIX 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 VIIX i.e., VIIX and Northern Lights go up and down completely randomly.
Pair Corralation between VIIX and Northern Lights
Given the investment horizon of 90 days VIIX is expected to under-perform the Northern Lights. In addition to that, VIIX is 3.47 times more volatile than Northern Lights. It trades about -0.16 of its total potential returns per unit of risk. Northern Lights is currently generating about 0.07 per unit of volatility. If you would invest 3,009 in Northern Lights on August 30, 2024 and sell it today you would earn a total of 1,213 from holding Northern Lights or generate 40.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.11% |
| Values | Daily Returns |
VIIX vs. Northern Lights
Performance |
| Timeline |
| VIIX |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Northern Lights |
VIIX and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIIX and Northern Lights
The main advantage of trading using opposite VIIX and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIIX 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.| VIIX vs. FT Vest Equity | VIIX vs. Zillow Group Class | VIIX vs. Northern Lights | VIIX vs. VanEck Vectors Moodys |
| Northern Lights vs. Inspire Global Hope | Northern Lights vs. Inspire SmallMid Cap | Northern Lights vs. Inspire International ESG | Northern Lights vs. Northern Lights |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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