Correlation Between Iridium Communications and NIP Group
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and NIP Group 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 Iridium Communications and NIP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and NIP Group American, you can compare the effects of market volatilities on Iridium Communications and NIP Group 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 Iridium Communications with a short position of NIP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and NIP Group.
Diversification Opportunities for Iridium Communications and NIP Group
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iridium and NIP is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and NIP Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIP Group American and Iridium Communications 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 Iridium Communications are associated (or correlated) with NIP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIP Group American has no effect on the direction of Iridium Communications i.e., Iridium Communications and NIP Group go up and down completely randomly.
Pair Corralation between Iridium Communications and NIP Group
Given the investment horizon of 90 days Iridium Communications is expected to under-perform the NIP Group. But the stock apears to be less risky and, when comparing its historical volatility, Iridium Communications is 4.2 times less risky than NIP Group. The stock trades about -0.03 of its potential returns per unit of risk. The NIP Group American is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 902.00 in NIP Group American on September 5, 2024 and sell it today you would lose (234.00) from holding NIP Group American or give up 25.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 18.59% |
| Values | Daily Returns |
Iridium Communications vs. NIP Group American
Performance |
| Timeline |
| Iridium Communications |
| NIP Group American |
Iridium Communications and NIP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and NIP Group
The main advantage of trading using opposite Iridium Communications and NIP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, NIP Group 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 NIP Group will offset losses from the drop in NIP Group's long position.| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
| NIP Group vs. Iridium Communications | NIP Group vs. IPG Photonics | NIP Group vs. Neogen | NIP Group vs. Omni Health |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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