Correlation Between GreenPower and NFI
Can any of the company-specific risk be diversified away by investing in both GreenPower and NFI 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 GreenPower and NFI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenPower Motor and NFI Group, you can compare the effects of market volatilities on GreenPower and NFI 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 GreenPower with a short position of NFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenPower and NFI.
Diversification Opportunities for GreenPower and NFI
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GreenPower and NFI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and NFI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFI Group and GreenPower 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 GreenPower Motor are associated (or correlated) with NFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFI Group has no effect on the direction of GreenPower i.e., GreenPower and NFI go up and down completely randomly.
Pair Corralation between GreenPower and NFI
Allowing for the 90-day total investment horizon GreenPower Motor is expected to generate 2.34 times more return on investment than NFI. However, GreenPower is 2.34 times more volatile than NFI Group. It trades about 0.0 of its potential returns per unit of risk. NFI Group is currently generating about -0.33 per unit of risk. If you would invest 101.00 in GreenPower Motor on August 31, 2024 and sell it today you would lose (2.00) from holding GreenPower Motor or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
GreenPower Motor vs. NFI Group
Performance |
| Timeline |
| GreenPower Motor |
| NFI Group |
GreenPower and NFI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenPower and NFI
The main advantage of trading using opposite GreenPower and NFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower position performs unexpectedly, NFI 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 NFI will offset losses from the drop in NFI's long position.| GreenPower vs. Phoenix Motor Common | GreenPower vs. Envirotech Vehicles | GreenPower vs. Volcon Inc | GreenPower vs. Zapp Electric Vehicles |
| NFI vs. Zapp Electric Vehicles | NFI vs. Guangzhou Automobile Group | NFI vs. Exor NV | NFI vs. Aston Martin Lagonda |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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