Correlation Between Conifer Holding and NI Holdings

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

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

Diversification Opportunities for Conifer Holding and NI Holdings

0.25

Correlation Coefficient

Conifer Holding  NI Holdings

Modest diversification

The 3 months correlation between Conifer and NODK is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Conifer Holding and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings and Conifer Holding 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 Conifer Holding are associated (or correlated) with NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of Conifer Holding i.e., Conifer Holding and NI Holdings go up and down completely randomly.

Pair Corralation between Conifer Holding and NI Holdings

Given the investment horizon of 90 days Conifer Holding is expected to generate 2.23 times more return on investment than NI Holdings. However, Conifer Holding is 2.23 times more volatile than NI Holdings. It trades about -0.1 of its potential returns per unit of risk. NI Holdings is currently generating about -0.38 per unit of risk. If you would invest  114.00  in Conifer Holding on October 10, 2024 and sell it today you would lose (8.00) from holding Conifer Holding or give up 7.02% of portfolio value over 90 days.

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

Conifer Holding  vs.  NI Holdings

Conifer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conifer Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Conifer Holding is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

NI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, NI Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Conifer Holding and NI Holdings

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

The idea behind Conifer Holding and NI 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.