Correlation Between Northern Lights and Altrius Global

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

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

Diversification Opportunities for Northern Lights and Altrius Global

0.74

Correlation Coefficient

Northern Lights  Altrius Global

Poor diversification

The 3 months correlation between Northern and Altrius is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Altrius Global Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altrius Global Dividend and Northern Lights 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 Northern Lights are associated (or correlated) with Altrius Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altrius Global Dividend has no effect on the direction of Northern Lights i.e., Northern Lights and Altrius Global go up and down completely randomly.

Pair Corralation between Northern Lights and Altrius Global

Given the investment horizon of 90 days Northern Lights is expected to generate 5.16 times less return on investment than Altrius Global. In addition to that, Northern Lights is 1.23 times more volatile than Altrius Global Dividend. It trades about 0.01 of its total potential returns per unit of risk. Altrius Global Dividend is currently generating about 0.04 per unit of volatility. If you would invest  3,027  in Altrius Global Dividend on October 9, 2024 and sell it today you would earn a total of  158.00  from holding Altrius Global Dividend or generate 5.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.43%
Values	Daily Returns

Northern Lights  vs.  Altrius Global Dividend

Northern Lights

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Lights has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Northern Lights is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Altrius Global Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Northern Lights and Altrius Global

The main advantage of trading using opposite Northern Lights and Altrius Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Altrius Global 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 Altrius Global will offset losses from the drop in Altrius Global's long position.

The idea behind Northern Lights and Altrius Global Dividend 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.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.