Correlation Between Northern Lights and TradersAI Large

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

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

Diversification Opportunities for Northern Lights and TradersAI Large

0.06

Correlation Coefficient

Northern Lights  TradersAI Large

Significant diversification

The 3 months correlation between Northern and TradersAI is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and TradersAI Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TradersAI Large Cap 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 TradersAI Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TradersAI Large Cap has no effect on the direction of Northern Lights i.e., Northern Lights and TradersAI Large go up and down completely randomly.

Pair Corralation between Northern Lights and TradersAI Large

Given the investment horizon of 90 days Northern Lights is expected to generate 0.61 times more return on investment than TradersAI Large. However, Northern Lights is 1.63 times less risky than TradersAI Large. It trades about 0.01 of its potential returns per unit of risk. TradersAI Large Cap is currently generating about 0.0 per unit of risk. If you would invest  3,647  in Northern Lights on June 30, 2025 and sell it today you would earn a total of  11.00  from holding Northern Lights or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Northern Lights  vs.  TradersAI Large Cap

Northern Lights

Risk-Adjusted Performance

Weakest

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

TradersAI Large Cap

Risk-Adjusted Performance

Weakest

Over the last 90 days TradersAI Large Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, TradersAI Large is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Northern Lights and TradersAI Large

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

The idea behind Northern Lights and TradersAI Large Cap 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.