Correlation Between Nicholas Fund and Advisors Inner

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

By analyzing existing cross correlation between Nicholas Fund Inc and Advisors Inner Circle, you can compare the effects of market volatilities on Nicholas Fund and Advisors Inner 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 Fund with a short position of Advisors Inner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicholas Fund and Advisors Inner.

Diversification Opportunities for Nicholas Fund and Advisors Inner

-0.56

Correlation Coefficient

Nicholas Fund  Advisors Inner

Excellent diversification

The 3 months correlation between Nicholas and Advisors is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nicholas Fund Inc and Advisors Inner Circle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advisors Inner Circle and Nicholas Fund 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 Fund Inc are associated (or correlated) with Advisors Inner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advisors Inner Circle has no effect on the direction of Nicholas Fund i.e., Nicholas Fund and Advisors Inner go up and down completely randomly.

Pair Corralation between Nicholas Fund and Advisors Inner

Assuming the 90 days horizon Nicholas Fund Inc is expected to generate 0.42 times more return on investment than Advisors Inner. However, Nicholas Fund Inc is 2.41 times less risky than Advisors Inner. It trades about -0.15 of its potential returns per unit of risk. Advisors Inner Circle is currently generating about -0.25 per unit of risk. If you would invest  10,092  in Nicholas Fund Inc on September 24, 2024 and sell it today you would lose (267.00) from holding Nicholas Fund Inc or give up 2.65% of portfolio value over 90 days.

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

Nicholas Fund Inc  vs.  Advisors Inner Circle

Nicholas Fund

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nicholas Fund Inc are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nicholas Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advisors Inner Circle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advisors Inner Circle has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Nicholas Fund and Advisors Inner

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

The idea behind Nicholas Fund Inc and Advisors Inner Circle 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.