Correlation Between IShares 25 and Northern Lights
Can any of the company-specific risk be diversified away by investing in both IShares 25 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 25 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 25 Year and Northern Lights, you can compare the effects of market volatilities on IShares 25 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 25 with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 25 and Northern Lights.
Diversification Opportunities for IShares 25 and Northern Lights
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Northern is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares 25 Year and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and IShares 25 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 25 Year 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 25 i.e., IShares 25 and Northern Lights go up and down completely randomly.
Pair Corralation between IShares 25 and Northern Lights
Given the investment horizon of 90 days iShares 25 Year is expected to under-perform the Northern Lights. In addition to that, IShares 25 is 7.55 times more volatile than Northern Lights. It trades about -0.06 of its total potential returns per unit of risk. Northern Lights is currently generating about -0.06 per unit of volatility. If you would invest 2,271 in Northern Lights on September 23, 2024 and sell it today you would lose (13.00) from holding Northern Lights or give up 0.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
iShares 25 Year vs. Northern Lights
Performance |
Timeline |
iShares 25 Year |
Northern Lights |
IShares 25 and Northern Lights Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares 25 and Northern Lights
The main advantage of trading using opposite IShares 25 and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 25 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 25 vs. iShares Treasury Floating | IShares 25 vs. Schwab Long Term Treasury | IShares 25 vs. iShares iBonds Dec | IShares 25 vs. iShares iBonds Dec |
Northern Lights vs. iShares iBoxx High | Northern Lights vs. iShares Broad USD | Northern Lights vs. iShares 0 5 Year | Northern Lights vs. Xtrackers USD High |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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