Correlation Between Northern Lights and BZDYF

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

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

Diversification Opportunities for Northern Lights and BZDYF

0.53

Correlation Coefficient

Northern Lights  BZDYF

Very weak diversification

The 3 months correlation between Northern and BZDYF is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and BZDYF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZDYF 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 BZDYF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZDYF has no effect on the direction of Northern Lights i.e., Northern Lights and BZDYF go up and down completely randomly.

Pair Corralation between Northern Lights and BZDYF

If you would invest  3,338  in Northern Lights on September 3, 2024 and sell it today you would earn a total of  259.00  from holding Northern Lights or generate 7.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Northern Lights  vs.  BZDYF

Northern Lights

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Lights are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Northern Lights may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BZDYF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BZDYF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BZDYF is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Northern Lights and BZDYF

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

The idea behind Northern Lights and BZDYF 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.