Correlation Between NI Holdings and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Shoe Carnival 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 Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Shoe Carnival, you can compare the effects of market volatilities on NI Holdings and Shoe Carnival 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 Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Shoe Carnival.
Diversification Opportunities for NI Holdings and Shoe Carnival
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NODK and Shoe is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival 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 Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of NI Holdings i.e., NI Holdings and Shoe Carnival go up and down completely randomly.
Pair Corralation between NI Holdings and Shoe Carnival
Given the investment horizon of 90 days NI Holdings is expected to generate 2.96 times less return on investment than Shoe Carnival. But when comparing it to its historical volatility, NI Holdings is 1.6 times less risky than Shoe Carnival. It trades about 0.04 of its potential returns per unit of risk. Shoe Carnival is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,137 in Shoe Carnival on September 12, 2024 and sell it today you would earn a total of 1,432 from holding Shoe Carnival or generate 67.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Shoe Carnival
Performance |
| Timeline |
| NI Holdings |
| Shoe Carnival |
NI Holdings and Shoe Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Shoe Carnival
The main advantage of trading using opposite NI Holdings and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival'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 |
| Shoe Carnival vs. Foot Locker | Shoe Carnival vs. Lands End | Shoe Carnival vs. Duluth Holdings | Shoe Carnival vs. Destination XL Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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