Correlation Between NI Holdings and Lemonade
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Lemonade 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 Lemonade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Lemonade, you can compare the effects of market volatilities on NI Holdings and Lemonade 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 Lemonade. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Lemonade.
Diversification Opportunities for NI Holdings and Lemonade
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NODK and Lemonade is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Lemonade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemonade 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 Lemonade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemonade has no effect on the direction of NI Holdings i.e., NI Holdings and Lemonade go up and down completely randomly.
Pair Corralation between NI Holdings and Lemonade
Given the investment horizon of 90 days NI Holdings is expected to generate 5.02 times less return on investment than Lemonade. But when comparing it to its historical volatility, NI Holdings is 3.01 times less risky than Lemonade. It trades about 0.07 of its potential returns per unit of risk. Lemonade is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,636 in Lemonade on September 1, 2024 and sell it today you would earn a total of 3,545 from holding Lemonade or generate 216.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Lemonade
Performance |
| Timeline |
| NI Holdings |
| Lemonade |
NI Holdings and Lemonade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Lemonade
The main advantage of trading using opposite NI Holdings and Lemonade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Lemonade 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 Lemonade will offset losses from the drop in Lemonade'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 |
| Lemonade vs. Fiverr International | Lemonade vs. Pinterest | Lemonade vs. Upstart Holdings | Lemonade vs. Fastly Inc |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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