Correlation Between Nicholas Financial and New Amer

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

By analyzing existing cross correlation between Nicholas Financial and New Amer Energy, you can compare the effects of market volatilities on Nicholas Financial and New Amer 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 Nicholas Financial with a short position of New Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicholas Financial and New Amer.

Diversification Opportunities for Nicholas Financial and New Amer

0.07

Correlation Coefficient

Nicholas Financial  New Amer

Significant diversification

The 3 months correlation between Nicholas and New is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nicholas Financial and New Amer Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Amer Energy and Nicholas Financial 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 Nicholas Financial are associated (or correlated) with New Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Amer Energy has no effect on the direction of Nicholas Financial i.e., Nicholas Financial and New Amer go up and down completely randomly.

Pair Corralation between Nicholas Financial and New Amer

If you would invest  0.01  in New Amer Energy on September 3, 2024 and sell it today you would earn a total of  0.00  from holding New Amer Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nicholas Financial  vs.  New Amer Energy

Nicholas Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nicholas Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Nicholas Financial is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

New Amer Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Amer Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, New Amer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nicholas Financial and New Amer

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

The idea behind Nicholas Financial and New Amer Energy 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.