Correlation Between Northern Lights and Inspire Global
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Inspire 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 Inspire 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 Inspire Global Hope, you can compare the effects of market volatilities on Northern Lights and Inspire 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 Inspire Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Inspire Global.
Diversification Opportunities for Northern Lights and Inspire Global
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and Inspire is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Inspire Global Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Global Hope 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 Inspire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Global Hope has no effect on the direction of Northern Lights i.e., Northern Lights and Inspire Global go up and down completely randomly.
Pair Corralation between Northern Lights and Inspire Global
Considering the 90-day investment horizon Northern Lights is expected to generate 9.35 times less return on investment than Inspire Global. But when comparing it to its historical volatility, Northern Lights is 1.81 times less risky than Inspire Global. It trades about 0.06 of its potential returns per unit of risk. Inspire Global Hope is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,748 in Inspire Global Hope on April 26, 2025 and sell it today you would earn a total of 447.00 from holding Inspire Global Hope or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Inspire Global Hope
Performance |
| Timeline |
| Northern Lights |
| Inspire Global Hope |
Northern Lights and Inspire Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Inspire Global
The main advantage of trading using opposite Northern Lights and Inspire Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Inspire 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 Inspire Global will offset losses from the drop in Inspire Global's long position.| Northern Lights vs. Inspire SmallMid Cap | Northern Lights vs. Inspire Global Hope | Northern Lights vs. Northern Lights | Northern Lights vs. Inspire International ESG |
| Inspire Global vs. Inspire SmallMid Cap | Inspire Global vs. Northern Lights | Inspire Global vs. Inspire International ESG | Inspire Global vs. Northern Lights |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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