Correlation Between NI Holdings and Trupanion
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Trupanion 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 Trupanion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Trupanion, you can compare the effects of market volatilities on NI Holdings and Trupanion 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 Trupanion. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Trupanion.
Diversification Opportunities for NI Holdings and Trupanion
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NODK and Trupanion is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion 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 Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of NI Holdings i.e., NI Holdings and Trupanion go up and down completely randomly.
Pair Corralation between NI Holdings and Trupanion
Given the investment horizon of 90 days NI Holdings is expected to generate 3.99 times less return on investment than Trupanion. But when comparing it to its historical volatility, NI Holdings is 2.3 times less risky than Trupanion. It trades about 0.07 of its potential returns per unit of risk. Trupanion is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,339 in Trupanion on August 31, 2024 and sell it today you would earn a total of 1,011 from holding Trupanion or generate 23.3% 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. Trupanion
Performance |
| Timeline |
| NI Holdings |
| Trupanion |
NI Holdings and Trupanion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Trupanion
The main advantage of trading using opposite NI Holdings and Trupanion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Trupanion 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 Trupanion will offset losses from the drop in Trupanion'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 |
| Trupanion vs. First American | Trupanion vs. Assurant | Trupanion vs. NMI Holdings | Trupanion vs. MGIC Investment Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |