Correlation Between White Mountains and NVR
Can any of the company-specific risk be diversified away by investing in both White Mountains and NVR 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 White Mountains and NVR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between White Mountains Insurance and NVR Inc, you can compare the effects of market volatilities on White Mountains and NVR 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 White Mountains with a short position of NVR. Check out your portfolio center. Please also check ongoing floating volatility patterns of White Mountains and NVR.
Diversification Opportunities for White Mountains and NVR
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between White and NVR is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding White Mountains Insurance and NVR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVR Inc and White Mountains 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 White Mountains Insurance are associated (or correlated) with NVR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVR Inc has no effect on the direction of White Mountains i.e., White Mountains and NVR go up and down completely randomly.
Pair Corralation between White Mountains and NVR
Considering the 90-day investment horizon White Mountains Insurance is expected to under-perform the NVR. But the stock apears to be less risky and, when comparing its historical volatility, White Mountains Insurance is 1.03 times less risky than NVR. The stock trades about -0.06 of its potential returns per unit of risk. The NVR Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 810,121 in NVR Inc on October 20, 2024 and sell it today you would earn a total of 26,165 from holding NVR Inc or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
White Mountains Insurance vs. NVR Inc
Performance |
| Timeline |
| White Mountains Insurance |
| NVR Inc |
White Mountains and NVR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with White Mountains and NVR
The main advantage of trading using opposite White Mountains and NVR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if White Mountains position performs unexpectedly, NVR 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 NVR will offset losses from the drop in NVR's long position.| White Mountains vs. NI Holdings | White Mountains vs. Donegal Group A | White Mountains vs. Donegal Group B | White Mountains vs. The Hanover Insurance |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |