Correlation Between NFI and Porsche Automobile
Can any of the company-specific risk be diversified away by investing in both NFI and Porsche Automobile 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 Porsche Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NFI Group and Porsche Automobile Holding, you can compare the effects of market volatilities on NFI and Porsche Automobile 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 Porsche Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFI and Porsche Automobile.
Diversification Opportunities for NFI and Porsche Automobile
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NFI and Porsche is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NFI Group and Porsche Automobile Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porsche Automobile 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 Porsche Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porsche Automobile has no effect on the direction of NFI i.e., NFI and Porsche Automobile go up and down completely randomly.
Pair Corralation between NFI and Porsche Automobile
Assuming the 90 days horizon NFI Group is expected to generate 0.83 times more return on investment than Porsche Automobile. However, NFI Group is 1.2 times less risky than Porsche Automobile. It trades about -0.27 of its potential returns per unit of risk. Porsche Automobile Holding is currently generating about -0.36 per unit of risk. If you would invest 1,189 in NFI Group on August 28, 2024 and sell it today you would lose (129.00) from holding NFI Group or give up 10.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NFI Group vs. Porsche Automobile Holding
Performance |
| Timeline |
| NFI Group |
| Porsche Automobile |
NFI and Porsche Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NFI and Porsche Automobile
The main advantage of trading using opposite NFI and Porsche Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NFI position performs unexpectedly, Porsche Automobile 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 Porsche Automobile will offset losses from the drop in Porsche Automobile's long position.| NFI vs. Zapp Electric Vehicles | NFI vs. Guangzhou Automobile Group | NFI vs. Exor NV | NFI vs. Aston Martin Lagonda |
| Porsche Automobile vs. Volkswagen AG 110 | Porsche Automobile vs. Bayerische Motoren Werke | Porsche Automobile vs. Volkswagen AG | Porsche Automobile vs. Mercedes Benz Group AG |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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