Correlation Between NFI and Superior Plus
Can any of the company-specific risk be diversified away by investing in both NFI and Superior Plus 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 NFI and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NFI Group and Superior Plus Corp, you can compare the effects of market volatilities on NFI and Superior Plus 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 NFI with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFI and Superior Plus.
Diversification Opportunities for NFI and Superior Plus
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NFI and Superior is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding NFI Group and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and NFI 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 NFI Group are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of NFI i.e., NFI and Superior Plus go up and down completely randomly.
Pair Corralation between NFI and Superior Plus
Assuming the 90 days trading horizon NFI Group is expected to generate 1.45 times more return on investment than Superior Plus. However, NFI is 1.45 times more volatile than Superior Plus Corp. It trades about 0.03 of its potential returns per unit of risk. Superior Plus Corp is currently generating about 0.0 per unit of risk. If you would invest 913.00 in NFI Group on November 19, 2024 and sell it today you would earn a total of 251.00 from holding NFI Group or generate 27.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NFI Group vs. Superior Plus Corp
Performance |
| Timeline |
| NFI Group |
| Superior Plus Corp |
NFI and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NFI and Superior Plus
The main advantage of trading using opposite NFI and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NFI position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.The idea behind NFI Group and Superior Plus Corp 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.| Superior Plus vs. Gibson Energy | Superior Plus vs. Parkland Fuel | Superior Plus vs. Mullen Group | Superior Plus vs. Keyera Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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