Correlation Between Steel Partners and NN
Can any of the company-specific risk be diversified away by investing in both Steel Partners and NN 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 Steel Partners and NN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Partners Holdings and NN Inc, you can compare the effects of market volatilities on Steel Partners and NN 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 Steel Partners with a short position of NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Partners and NN.
Diversification Opportunities for Steel Partners and NN
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Steel and NN is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Steel Partners Holdings and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Steel Partners 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 Steel Partners Holdings are associated (or correlated) with NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Steel Partners i.e., Steel Partners and NN go up and down completely randomly.
Pair Corralation between Steel Partners and NN
Given the investment horizon of 90 days Steel Partners is expected to generate 1.06 times less return on investment than NN. But when comparing it to its historical volatility, Steel Partners Holdings is 1.32 times less risky than NN. It trades about 0.04 of its potential returns per unit of risk. NN Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 395.00 in NN Inc on August 28, 2024 and sell it today you would earn a total of 0.00 from holding NN Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Partners Holdings vs. NN Inc
Performance |
| Timeline |
| Steel Partners Holdings |
| NN Inc |
Steel Partners and NN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Partners and NN
The main advantage of trading using opposite Steel Partners and NN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Partners position performs unexpectedly, NN 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 NN will offset losses from the drop in NN's long position.| Steel Partners vs. Vast Renewables Limited | Steel Partners vs. 1847 Holdings LLC | Steel Partners vs. Westport Fuel Systems | Steel Partners vs. Brookfield Business Partners |
| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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