Correlation Between NI Holdings and Heritage Insurance
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Heritage Insurance 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 Heritage Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Heritage Insurance Hldgs, you can compare the effects of market volatilities on NI Holdings and Heritage Insurance 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 Heritage Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Heritage Insurance.
Diversification Opportunities for NI Holdings and Heritage Insurance
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NODK and Heritage is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Heritage Insurance Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Insurance Hldgs 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 Heritage Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Insurance Hldgs has no effect on the direction of NI Holdings i.e., NI Holdings and Heritage Insurance go up and down completely randomly.
Pair Corralation between NI Holdings and Heritage Insurance
Given the investment horizon of 90 days NI Holdings is expected to generate 0.6 times more return on investment than Heritage Insurance. However, NI Holdings is 1.68 times less risky than Heritage Insurance. It trades about -0.04 of its potential returns per unit of risk. Heritage Insurance Hldgs is currently generating about -0.23 per unit of risk. If you would invest 1,556 in NI Holdings on November 2, 2024 and sell it today you would lose (20.00) from holding NI Holdings or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Heritage Insurance Hldgs
Performance |
| Timeline |
| NI Holdings |
| Heritage Insurance Hldgs |
NI Holdings and Heritage Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Heritage Insurance
The main advantage of trading using opposite NI Holdings and Heritage Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Heritage Insurance 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 Heritage Insurance will offset losses from the drop in Heritage Insurance'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 |
| Heritage Insurance vs. Universal Insurance Holdings | Heritage Insurance vs. Donegal Group B | Heritage Insurance vs. Horace Mann Educators | Heritage Insurance vs. NI Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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