Correlation Between NFI and Martinrea International

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

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

Diversification Opportunities for NFI and Martinrea International

0.83

Correlation Coefficient

NFI  Martinrea International

Very poor diversification

The 3 months correlation between NFI and Martinrea is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NFI Group and Martinrea International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martinrea International and NFI 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 NFI Group are associated (or correlated) with Martinrea International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martinrea International has no effect on the direction of NFI i.e., NFI and Martinrea International go up and down completely randomly.

Pair Corralation between NFI and Martinrea International

Assuming the 90 days trading horizon NFI Group is expected to under-perform the Martinrea International. But the stock apears to be less risky and, when comparing its historical volatility, NFI Group is 1.28 times less risky than Martinrea International. The stock trades about -0.26 of its potential returns per unit of risk. The Martinrea International is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,124  in Martinrea International on September 3, 2024 and sell it today you would lose (95.00) from holding Martinrea International or give up 8.45% of portfolio value over 90 days.

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

NFI Group  vs.  Martinrea International

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. In spite of unfluctuating performance in the last few months, the Stock's forward 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.

Martinrea International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martinrea International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with NFI and Martinrea International

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

The idea behind NFI Group and Martinrea International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.