Correlation Between GreenPower and NFI

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

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

Diversification Opportunities for GreenPower and NFI

0.87

Correlation Coefficient

GreenPower  NFI

Very poor diversification

The 3 months correlation between GreenPower and NFI is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and NFI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFI Group and GreenPower 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 GreenPower Motor 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 GreenPower i.e., GreenPower and NFI go up and down completely randomly.

Pair Corralation between GreenPower and NFI

Allowing for the 90-day total investment horizon GreenPower Motor is expected to under-perform the NFI. In addition to that, GreenPower is 3.03 times more volatile than NFI Group. It trades about -0.12 of its total potential returns per unit of risk. NFI Group is currently generating about -0.21 per unit of volatility. If you would invest  1,263  in NFI Group on October 8, 2024 and sell it today you would lose (266.00) from holding NFI Group or give up 21.06% of portfolio value over 90 days.

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

GreenPower Motor  vs.  NFI Group

GreenPower Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GreenPower Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 GreenPower and NFI

The main advantage of trading using opposite GreenPower and NFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower 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 GreenPower Motor 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.