Correlation Between Northern Lights and Peerless Option
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Peerless Option 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 Peerless Option into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Peerless Option Income, you can compare the effects of market volatilities on Northern Lights and Peerless Option 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 Peerless Option. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Peerless Option.
Diversification Opportunities for Northern Lights and Peerless Option
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northern and Peerless is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Peerless Option Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peerless Option Income 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 Peerless Option. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peerless Option Income has no effect on the direction of Northern Lights i.e., Northern Lights and Peerless Option go up and down completely randomly.
Pair Corralation between Northern Lights and Peerless Option
Given the investment horizon of 90 days Northern Lights is expected to generate 1.23 times less return on investment than Peerless Option. In addition to that, Northern Lights is 1.61 times more volatile than Peerless Option Income. It trades about 0.08 of its total potential returns per unit of risk. Peerless Option Income is currently generating about 0.15 per unit of volatility. If you would invest 1,981 in Peerless Option Income on September 9, 2025 and sell it today you would earn a total of 98.50 from holding Peerless Option Income or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Northern Lights vs. Peerless Option Income
Performance |
| Timeline |
| Northern Lights |
| Peerless Option Income |
Northern Lights and Peerless Option Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Peerless Option
The main advantage of trading using opposite Northern Lights and Peerless Option positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Peerless Option 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 Peerless Option will offset losses from the drop in Peerless Option's long position.| Northern Lights vs. Northern Lights | Northern Lights vs. Peerless Option Income | Northern Lights vs. iShares Trust | Northern Lights vs. Pacer Funds Trust |
| Peerless Option vs. Northern Lights | Peerless Option vs. iShares Trust | Peerless Option vs. Series Portfolios Trust | Peerless Option 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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