Correlation Between SPDR FTSE and Northern Lights
Can any of the company-specific risk be diversified away by investing in both SPDR FTSE 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 SPDR FTSE and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR FTSE International and Northern Lights, you can compare the effects of market volatilities on SPDR FTSE 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 SPDR FTSE with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR FTSE and Northern Lights.
Diversification Opportunities for SPDR FTSE and Northern Lights
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and Northern is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding SPDR FTSE International and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and SPDR FTSE 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 SPDR FTSE International 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 SPDR FTSE i.e., SPDR FTSE and Northern Lights go up and down completely randomly.
Pair Corralation between SPDR FTSE and Northern Lights
Considering the 90-day investment horizon SPDR FTSE International is expected to under-perform the Northern Lights. But the etf apears to be less risky and, when comparing its historical volatility, SPDR FTSE International is 1.25 times less risky than Northern Lights. The etf trades about -0.06 of its potential returns per unit of risk. The Northern Lights is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 3,407 in Northern Lights on September 1, 2024 and sell it today you would earn a total of 188.00 from holding Northern Lights or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR FTSE International vs. Northern Lights
Performance |
| Timeline |
| SPDR FTSE International |
| Northern Lights |
SPDR FTSE and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR FTSE and Northern Lights
The main advantage of trading using opposite SPDR FTSE and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR FTSE 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.| SPDR FTSE vs. FT Vest Equity | SPDR FTSE vs. Zillow Group Class | SPDR FTSE vs. Northern Lights | SPDR FTSE vs. VanEck Vectors Moodys |
| Northern Lights vs. Sterling Capital Focus | Northern Lights vs. Roundhill ETF Trust | Northern Lights vs. Northern Lights | Northern Lights vs. First Trust Exchange Traded |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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