Correlation Between First American and Nib Holdings
Can any of the company-specific risk be diversified away by investing in both First American and Nib Holdings 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 First American and Nib Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First American Financial and nib holdings limited, you can compare the effects of market volatilities on First American and Nib Holdings 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 First American with a short position of Nib Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Nib Holdings.
Diversification Opportunities for First American and Nib Holdings
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Nib is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding First American Financial and nib holdings limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nib holdings limited and First American 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 First American Financial are associated (or correlated) with Nib Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nib holdings limited has no effect on the direction of First American i.e., First American and Nib Holdings go up and down completely randomly.
Pair Corralation between First American and Nib Holdings
Assuming the 90 days horizon First American Financial is expected to generate 0.67 times more return on investment than Nib Holdings. However, First American Financial is 1.5 times less risky than Nib Holdings. It trades about 0.2 of its potential returns per unit of risk. nib holdings limited is currently generating about -0.16 per unit of risk. If you would invest 5,999 in First American Financial on September 13, 2024 and sell it today you would earn a total of 301.00 from holding First American Financial or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First American Financial vs. nib holdings limited
Performance |
| Timeline |
| First American Financial |
| nib holdings limited |
First American and Nib Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First American and Nib Holdings
The main advantage of trading using opposite First American and Nib Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American position performs unexpectedly, Nib Holdings 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 Nib Holdings will offset losses from the drop in Nib Holdings' long position.| First American vs. Silicon Motion Technology | First American vs. Avanos Medical | First American vs. SAFETY MEDICAL PROD | First American vs. PTT Global Chemical |
| Nib Holdings vs. BORR DRILLING NEW | Nib Holdings vs. Pembina Pipeline Corp | Nib Holdings vs. Tri Pointe Homes | Nib Holdings vs. CompuGroup Medical SE |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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