Correlation Between NI Holdings and Eastern
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Eastern 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 NI Holdings and Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Eastern Co, you can compare the effects of market volatilities on NI Holdings and Eastern 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 NI Holdings with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Eastern.
Diversification Opportunities for NI Holdings and Eastern
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NODK and Eastern is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and NI Holdings 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 NI Holdings are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of NI Holdings i.e., NI Holdings and Eastern go up and down completely randomly.
Pair Corralation between NI Holdings and Eastern
Given the investment horizon of 90 days NI Holdings is expected to generate 1.66 times less return on investment than Eastern. But when comparing it to its historical volatility, NI Holdings is 1.72 times less risky than Eastern. It trades about 0.03 of its potential returns per unit of risk. Eastern Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,183 in Eastern Co on August 24, 2024 and sell it today you would earn a total of 636.00 from holding Eastern Co or generate 29.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Eastern Co
Performance |
| Timeline |
| NI Holdings |
| Eastern |
NI Holdings and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Eastern
The main advantage of trading using opposite NI Holdings and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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