Correlation Between NN Group and Equitable Holdings

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

By analyzing existing cross correlation between NN Group NV and Equitable Holdings, you can compare the effects of market volatilities on NN Group and Equitable 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 NN Group with a short position of Equitable Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN Group and Equitable Holdings.

Diversification Opportunities for NN Group and Equitable Holdings

-0.38

Correlation Coefficient

NN Group  Equitable Holdings

Very good diversification

The 3 months correlation between 2NN and Equitable is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NN Group NV and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings and NN Group 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 NN Group NV are associated (or correlated) with Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of NN Group i.e., NN Group and Equitable Holdings go up and down completely randomly.

Pair Corralation between NN Group and Equitable Holdings

Assuming the 90 days horizon NN Group NV is expected to under-perform the Equitable Holdings. But the stock apears to be less risky and, when comparing its historical volatility, NN Group NV is 1.75 times less risky than Equitable Holdings. The stock trades about -0.39 of its potential returns per unit of risk. The Equitable Holdings is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  4,377  in Equitable Holdings on September 23, 2024 and sell it today you would lose (157.00) from holding Equitable Holdings or give up 3.59% of portfolio value over 90 days.

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

NN Group NV  vs.  Equitable Holdings

NN Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Equitable Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equitable Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Equitable Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NN Group and Equitable Holdings

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

The idea behind NN Group NV and Equitable Holdings 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.