Correlation Between NI Holdings and GoHealth

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Can any of the company-specific risk be diversified away by investing in both NI Holdings and GoHealth 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 GoHealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and GoHealth, you can compare the effects of market volatilities on NI Holdings and GoHealth 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 GoHealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and GoHealth.

Diversification Opportunities for NI Holdings and GoHealth

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between NODK and GoHealth is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and GoHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoHealth 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 GoHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoHealth has no effect on the direction of NI Holdings i.e., NI Holdings and GoHealth go up and down completely randomly.

Pair Corralation between NI Holdings and GoHealth

Given the investment horizon of 90 days NI Holdings is expected to generate 1.16 times less return on investment than GoHealth. But when comparing it to its historical volatility, NI Holdings is 3.53 times less risky than GoHealth. It trades about 0.08 of its potential returns per unit of risk. GoHealth is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,160  in GoHealth on August 28, 2024 and sell it today you would earn a total of  6.00  from holding GoHealth or generate 0.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

NI Holdings  vs.  GoHealth

 Performance 
       Timeline  
NI Holdings 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, NI Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.
GoHealth 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in GoHealth are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, GoHealth displayed solid returns over the last few months and may actually be approaching a breakup point.

NI Holdings and GoHealth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NI Holdings and GoHealth

The main advantage of trading using opposite NI Holdings and GoHealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, GoHealth 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 GoHealth will offset losses from the drop in GoHealth's long position.
The idea behind NI Holdings and GoHealth 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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