Correlation Between Intergroup and National Storm

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

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

Diversification Opportunities for Intergroup and National Storm

0.32

Correlation Coefficient

Intergroup  National Storm

Weak diversification

The 3 months correlation between Intergroup and National is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Intergroup and National Storm Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storm Recovery and Intergroup 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 The Intergroup are associated (or correlated) with National Storm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storm Recovery has no effect on the direction of Intergroup i.e., Intergroup and National Storm go up and down completely randomly.

Pair Corralation between Intergroup and National Storm

Given the investment horizon of 90 days The Intergroup is expected to under-perform the National Storm. But the stock apears to be less risky and, when comparing its historical volatility, The Intergroup is 5.4 times less risky than National Storm. The stock trades about -0.11 of its potential returns per unit of risk. The National Storm Recovery is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  64.00  in National Storm Recovery on September 14, 2024 and sell it today you would lose (31.00) from holding National Storm Recovery or give up 48.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

The Intergroup  vs.  National Storm Recovery

Intergroup

Risk-Adjusted Performance

0 of 100

Very Weak

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

National Storm Recovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Storm Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Intergroup and National Storm

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

The idea behind The Intergroup and National Storm Recovery 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.