Correlation Between Northern Lights and OQAL

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Can any of the company-specific risk be diversified away by investing in both Northern Lights and OQAL 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 OQAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and OQAL, you can compare the effects of market volatilities on Northern Lights and OQAL 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 OQAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and OQAL.

Diversification Opportunities for Northern Lights and OQAL

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Northern and OQAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and OQAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OQAL 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 OQAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OQAL has no effect on the direction of Northern Lights i.e., Northern Lights and OQAL go up and down completely randomly.

Pair Corralation between Northern Lights and OQAL

If you would invest  3,695  in Northern Lights on December 29, 2023 and sell it today you would earn a total of  181.00  from holding Northern Lights or generate 4.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Northern Lights  vs.  OQAL

 Performance 
       Timeline  
Northern Lights 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Northern Lights are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Northern Lights may actually be approaching a critical reversion point that can send shares even higher in April 2024.
OQAL 

Risk-Adjusted Performance

0 of 100

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

Northern Lights and OQAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Northern Lights and OQAL

The main advantage of trading using opposite Northern Lights and OQAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, OQAL 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 OQAL will offset losses from the drop in OQAL's long position.
The idea behind Northern Lights and OQAL 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.
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 Stocks Directory module to find actively traded stocks across global markets.

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