Correlation Between Ivy High and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Ivy High 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 Ivy High and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ivy High Income and Northern Lights, you can compare the effects of market volatilities on Ivy High 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 Ivy High with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivy High and Northern Lights.
Diversification Opportunities for Ivy High and Northern Lights
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ivy and Northern is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ivy High Income and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Ivy High 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 Ivy High Income 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 Ivy High i.e., Ivy High and Northern Lights go up and down completely randomly.
Pair Corralation between Ivy High and Northern Lights
Assuming the 90 days horizon Ivy High is expected to generate 10.11 times less return on investment than Northern Lights. But when comparing it to its historical volatility, Ivy High Income is 2.68 times less risky than Northern Lights. It trades about 0.1 of its potential returns per unit of risk. Northern Lights is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2,851 in Northern Lights on September 1, 2024 and sell it today you would earn a total of 153.00 from holding Northern Lights or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ivy High Income vs. Northern Lights
Performance |
| Timeline |
| Ivy High Income |
| Northern Lights |
Ivy High and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ivy High and Northern Lights
The main advantage of trading using opposite Ivy High and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivy High 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.| Ivy High vs. California High Yield Municipal | Ivy High vs. Morningstar Aggressive Growth | Ivy High vs. Franklin High Income | Ivy High vs. Western Asset High |
| Northern Lights vs. Us Strategic Equity | Northern Lights vs. Cutler Equity | Northern Lights vs. Us Vector Equity | Northern Lights vs. Artisan Select Equity |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |