Correlation Between Aston Martin and NFI

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

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

Diversification Opportunities for Aston Martin and NFI

0.47

Correlation Coefficient

Aston Martin  NFI

Very weak diversification

The 3 months correlation between Aston and NFI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aston Martin Lagonda and NFI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFI Group and Aston Martin 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 Aston Martin Lagonda are associated (or correlated) with NFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFI Group has no effect on the direction of Aston Martin i.e., Aston Martin and NFI go up and down completely randomly.

Pair Corralation between Aston Martin and NFI

Assuming the 90 days horizon Aston Martin Lagonda is expected to generate 3.39 times more return on investment than NFI. However, Aston Martin is 3.39 times more volatile than NFI Group. It trades about 0.01 of its potential returns per unit of risk. NFI Group is currently generating about -0.21 per unit of risk. If you would invest  146.00  in Aston Martin Lagonda on October 8, 2024 and sell it today you would lose (10.00) from holding Aston Martin Lagonda or give up 6.85% of portfolio value over 90 days.

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

Aston Martin Lagonda  vs.  NFI Group

Aston Martin Lagonda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aston Martin Lagonda has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Aston Martin is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NFI Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFI Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aston Martin and NFI

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

The idea behind Aston Martin Lagonda and NFI Group 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.