Correlation Between Chia and NN
Can any of the company-specific risk be diversified away by investing in both Chia 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 Chia and NN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and NN Inc, you can compare the effects of market volatilities on Chia 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 Chia with a short position of NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and NN.
Diversification Opportunities for Chia and NN
Modest diversification
The 3 months correlation between Chia and NN is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Chia and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Chia 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 Chia 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 Chia i.e., Chia and NN go up and down completely randomly.
Pair Corralation between Chia and NN
Assuming the 90 days trading horizon Chia is expected to generate 2.09 times more return on investment than NN. However, Chia is 2.09 times more volatile than NN Inc. It trades about 0.06 of its potential returns per unit of risk. NN Inc is currently generating about -0.01 per unit of risk. If you would invest 1,376 in Chia on November 2, 2024 and sell it today you would earn a total of 364.00 from holding Chia or generate 26.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.26% |
| Values | Daily Returns |
Chia vs. NN Inc
Performance |
| Timeline |
| Chia |
| NN Inc |
Chia and NN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and NN
The main advantage of trading using opposite Chia and NN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia 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.The idea behind Chia and NN Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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