Correlation Between BlackRock ETF and Northern Lights

Can any of the company-specific risk be diversified away by investing in both BlackRock ETF 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 BlackRock ETF and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock ETF Trust and Northern Lights, you can compare the effects of market volatilities on BlackRock ETF 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 BlackRock ETF with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock ETF and Northern Lights.

Diversification Opportunities for BlackRock ETF and Northern Lights

0.0

Correlation Coefficient

BlackRock ETF  Northern Lights

Pay attention - limited upside

The 3 months correlation between BlackRock and Northern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ETF Trust and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and BlackRock ETF 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 BlackRock ETF Trust 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 BlackRock ETF i.e., BlackRock ETF and Northern Lights go up and down completely randomly.

Pair Corralation between BlackRock ETF and Northern Lights

If you would invest (100.00) in BlackRock ETF Trust on December 21, 2024 and sell it today you would earn a total of  100.00  from holding BlackRock ETF Trust or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BlackRock ETF Trust  vs.  Northern Lights

BlackRock ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, BlackRock ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Northern Lights

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Lights has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Northern Lights is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BlackRock ETF and Northern Lights

The main advantage of trading using opposite BlackRock ETF and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock ETF 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.

The idea behind BlackRock ETF Trust and Northern Lights pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.