Correlation Between NI Holdings and Global Indemnity
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Global Indemnity 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 Global Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Global Indemnity PLC, you can compare the effects of market volatilities on NI Holdings and Global Indemnity 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 Global Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Global Indemnity.
Diversification Opportunities for NI Holdings and Global Indemnity
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NODK and Global is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Global Indemnity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Indemnity PLC 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 Global Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Indemnity PLC has no effect on the direction of NI Holdings i.e., NI Holdings and Global Indemnity go up and down completely randomly.
Pair Corralation between NI Holdings and Global Indemnity
Given the investment horizon of 90 days NI Holdings is expected to generate 1.3 times more return on investment than Global Indemnity. However, NI Holdings is 1.3 times more volatile than Global Indemnity PLC. It trades about 0.25 of its potential returns per unit of risk. Global Indemnity PLC is currently generating about 0.01 per unit of risk. If you would invest 1,560 in NI Holdings on August 24, 2024 and sell it today you would earn a total of 89.00 from holding NI Holdings or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NI Holdings vs. Global Indemnity PLC
Performance |
| Timeline |
| NI Holdings |
| Global Indemnity PLC |
NI Holdings and Global Indemnity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Global Indemnity
The main advantage of trading using opposite NI Holdings and Global Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Global Indemnity 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 Global Indemnity will offset losses from the drop in Global Indemnity'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 |
| Global Indemnity vs. Selective Insurance Group | Global Indemnity vs. Kemper | Global Indemnity vs. Donegal Group B | Global Indemnity vs. Argo Group International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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