Correlation Between NFI and Aston Martin

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

By analyzing existing cross correlation between NFI Group and Aston Martin Lagonda, you can compare the effects of market volatilities on NFI and Aston Martin 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 Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFI and Aston Martin.

Diversification Opportunities for NFI and Aston Martin

0.2

Correlation Coefficient

NFI  Aston Martin

Modest diversification

The 3 months correlation between NFI and Aston is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NFI Group and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda 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 Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of NFI i.e., NFI and Aston Martin go up and down completely randomly.

Pair Corralation between NFI and Aston Martin

Assuming the 90 days horizon NFI Group is expected to generate 0.89 times more return on investment than Aston Martin. However, NFI Group is 1.12 times less risky than Aston Martin. It trades about 0.0 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.06 per unit of risk. If you would invest  965.00  in NFI Group on December 20, 2024 and sell it today you would lose (68.00) from holding NFI Group or give up 7.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

NFI Group  vs.  Aston Martin Lagonda

NFI Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days NFI Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, NFI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aston Martin Lagonda

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NFI and Aston Martin

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

The idea behind NFI Group and Aston Martin Lagonda 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.