Correlation Between NI Holdings and Independence Realty
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Independence Realty 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 Independence Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Independence Realty Trust, you can compare the effects of market volatilities on NI Holdings and Independence Realty 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 Independence Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Independence Realty.
Diversification Opportunities for NI Holdings and Independence Realty
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NODK and Independence is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Independence Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Realty Trust 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 Independence Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Realty Trust has no effect on the direction of NI Holdings i.e., NI Holdings and Independence Realty go up and down completely randomly.
Pair Corralation between NI Holdings and Independence Realty
Given the investment horizon of 90 days NI Holdings is expected to generate 1.76 times less return on investment than Independence Realty. In addition to that, NI Holdings is 1.05 times more volatile than Independence Realty Trust. It trades about 0.07 of its total potential returns per unit of risk. Independence Realty Trust is currently generating about 0.13 per unit of volatility. If you would invest 1,361 in Independence Realty Trust on August 27, 2024 and sell it today you would earn a total of 814.00 from holding Independence Realty Trust or generate 59.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Independence Realty Trust
Performance |
| Timeline |
| NI Holdings |
| Independence Realty Trust |
NI Holdings and Independence Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Independence Realty
The main advantage of trading using opposite NI Holdings and Independence Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Independence Realty 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 Independence Realty will offset losses from the drop in Independence Realty'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 |
| Independence Realty vs. Essex Property Trust | Independence Realty vs. Mid America Apartment Communities | Independence Realty vs. Nexpoint Residential Trust |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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