Correlation Between NI Holdings and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Willamette Valley 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 Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Willamette Valley Vineyards, you can compare the effects of market volatilities on NI Holdings and Willamette Valley 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 Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Willamette Valley.
Diversification Opportunities for NI Holdings and Willamette Valley
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NODK and Willamette is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of NI Holdings i.e., NI Holdings and Willamette Valley go up and down completely randomly.
Pair Corralation between NI Holdings and Willamette Valley
Given the investment horizon of 90 days NI Holdings is expected to generate 0.86 times more return on investment than Willamette Valley. However, NI Holdings is 1.16 times less risky than Willamette Valley. It trades about 0.02 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about 0.01 per unit of risk. If you would invest 1,585 in NI Holdings on August 29, 2024 and sell it today you would earn a total of 7.00 from holding NI Holdings or generate 0.44% 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. Willamette Valley Vineyards
Performance |
| Timeline |
| NI Holdings |
| Willamette Valley |
NI Holdings and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Willamette Valley
The main advantage of trading using opposite NI Holdings and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Willamette Valley 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 Willamette Valley will offset losses from the drop in Willamette Valley's long position.| NI Holdings vs. Argo Group International | NI Holdings vs. Donegal Group A | NI Holdings vs. Selective Insurance Group |
| Willamette Valley vs. Andrew Peller Limited | Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Willamette Valley Vineyards | Willamette Valley vs. The Tinley Beverage |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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