Correlation Between Tejon Ranch and NN
Can any of the company-specific risk be diversified away by investing in both Tejon Ranch 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 Tejon Ranch and NN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tejon Ranch Co and NN Inc, you can compare the effects of market volatilities on Tejon Ranch 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 Tejon Ranch with a short position of NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tejon Ranch and NN.
Diversification Opportunities for Tejon Ranch and NN
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tejon and NN is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Tejon Ranch Co and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Tejon Ranch 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 Tejon Ranch Co 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 Tejon Ranch i.e., Tejon Ranch and NN go up and down completely randomly.
Pair Corralation between Tejon Ranch and NN
Considering the 90-day investment horizon Tejon Ranch Co is expected to under-perform the NN. But the stock apears to be less risky and, when comparing its historical volatility, Tejon Ranch Co is 1.95 times less risky than NN. The stock trades about -0.06 of its potential returns per unit of risk. The NN Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 400.00 in NN Inc on August 24, 2024 and sell it today you would lose (21.00) from holding NN Inc or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tejon Ranch Co vs. NN Inc
Performance |
| Timeline |
| Tejon Ranch |
| NN Inc |
Tejon Ranch and NN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tejon Ranch and NN
The main advantage of trading using opposite Tejon Ranch and NN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tejon Ranch 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.| Tejon Ranch vs. Steel Partners Holdings | Tejon Ranch vs. Compass Diversified | Tejon Ranch vs. Brookfield Business Partners | Tejon Ranch vs. Matthews International |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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