Correlation Between Porsche Automobile and NFI
Can any of the company-specific risk be diversified away by investing in both Porsche Automobile and NFI 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 Porsche Automobile and NFI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porsche Automobile Holding and NFI Group, you can compare the effects of market volatilities on Porsche Automobile and NFI 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 Porsche Automobile with a short position of NFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porsche Automobile and NFI.
Diversification Opportunities for Porsche Automobile and NFI
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Porsche and NFI is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Porsche Automobile Holding and NFI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFI Group and Porsche Automobile 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 Porsche Automobile Holding are associated (or correlated) with NFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFI Group has no effect on the direction of Porsche Automobile i.e., Porsche Automobile and NFI go up and down completely randomly.
Pair Corralation between Porsche Automobile and NFI
Assuming the 90 days horizon Porsche Automobile Holding is expected to under-perform the NFI. In addition to that, Porsche Automobile is 1.29 times more volatile than NFI Group. It trades about -0.31 of its total potential returns per unit of risk. NFI Group is currently generating about -0.31 per unit of volatility. If you would invest 1,195 in NFI Group on August 24, 2024 and sell it today you would lose (150.00) from holding NFI Group or give up 12.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Porsche Automobile Holding vs. NFI Group
Performance |
| Timeline |
| Porsche Automobile |
| NFI Group |
Porsche Automobile and NFI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Porsche Automobile and NFI
The main advantage of trading using opposite Porsche Automobile and NFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porsche Automobile position performs unexpectedly, NFI 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 NFI will offset losses from the drop in NFI's long position.| Porsche Automobile vs. Volkswagen AG 110 | Porsche Automobile vs. Bayerische Motoren Werke | Porsche Automobile vs. Volkswagen AG | Porsche Automobile vs. Mercedes Benz Group AG |
| NFI vs. Zapp Electric Vehicles | NFI vs. Guangzhou Automobile Group | NFI vs. Exor NV | NFI vs. Aston Martin Lagonda |
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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