Correlation Between Neinor Homes and Allstate

Can any of the company-specific risk be diversified away by investing in both Neinor Homes and Allstate 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 Neinor Homes and Allstate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Neinor Homes SA and The Allstate, you can compare the effects of market volatilities on Neinor Homes and Allstate 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 Neinor Homes with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and Allstate.

Diversification Opportunities for Neinor Homes and Allstate

-0.28

Correlation Coefficient

Neinor Homes  Allstate

Very good diversification

The 3 months correlation between Neinor and Allstate is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Neinor Homes 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 Neinor Homes SA are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Neinor Homes i.e., Neinor Homes and Allstate go up and down completely randomly.

Pair Corralation between Neinor Homes and Allstate

Assuming the 90 days trading horizon Neinor Homes SA is expected to under-perform the Allstate. But the stock apears to be less risky and, when comparing its historical volatility, Neinor Homes SA is 1.03 times less risky than Allstate. The stock trades about -0.04 of its potential returns per unit of risk. The The Allstate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  18,402  in The Allstate on December 21, 2024 and sell it today you would earn a total of  883.00  from holding The Allstate or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Neinor Homes SA  vs.  The Allstate

Neinor Homes SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neinor Homes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Neinor Homes is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Allstate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Allstate may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Neinor Homes and Allstate

The main advantage of trading using opposite Neinor Homes and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neinor Homes position performs unexpectedly, Allstate 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 Allstate will offset losses from the drop in Allstate's long position.

The idea behind Neinor Homes SA and The Allstate 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.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.