Correlation Between Kinsale Capital and NI Holdings

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

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

Diversification Opportunities for Kinsale Capital and NI Holdings

0.68

Correlation Coefficient

Kinsale Capital  NI Holdings

Poor diversification

The 3 months correlation between Kinsale and NODK is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kinsale Capital Group and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings and Kinsale Capital 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 Kinsale Capital Group 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 Kinsale Capital i.e., Kinsale Capital and NI Holdings go up and down completely randomly.

Pair Corralation between Kinsale Capital and NI Holdings

Given the investment horizon of 90 days Kinsale Capital Group is expected to under-perform the NI Holdings. In addition to that, Kinsale Capital is 1.28 times more volatile than NI Holdings. It trades about -0.54 of its total potential returns per unit of risk. NI Holdings is currently generating about -0.37 per unit of volatility. If you would invest  1,676  in NI Holdings on October 12, 2024 and sell it today you would lose (163.00) from holding NI Holdings or give up 9.73% of portfolio value over 90 days.

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

Kinsale Capital Group  vs.  NI Holdings

Kinsale Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinsale Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional 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 Kinsale Capital and NI Holdings

The main advantage of trading using opposite Kinsale Capital and NI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinsale Capital 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 Kinsale Capital Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.