Correlation Between NFI and Exor NV

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

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

Diversification Opportunities for NFI and Exor NV

-0.58

Correlation Coefficient

NFI  Exor NV

Excellent diversification

The 3 months correlation between NFI and Exor is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NFI Group and Exor NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exor NV 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 Exor NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exor NV has no effect on the direction of NFI i.e., NFI and Exor NV go up and down completely randomly.

Pair Corralation between NFI and Exor NV

Assuming the 90 days horizon NFI Group is expected to under-perform the Exor NV. In addition to that, NFI is 2.47 times more volatile than Exor NV. It trades about -0.01 of its total potential returns per unit of risk. Exor NV is currently generating about 0.08 per unit of volatility. If you would invest  9,254  in Exor NV on December 26, 2024 and sell it today you would earn a total of  746.00  from holding Exor NV or generate 8.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NFI Group  vs.  Exor NV

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.

Exor NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Exor NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Exor NV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NFI and Exor NV

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

The idea behind NFI Group and Exor NV 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.