Correlation Between NN and RCABS
Can any of the company-specific risk be diversified away by investing in both NN and RCABS 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 NN and RCABS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NN Inc and RCABS Inc, you can compare the effects of market volatilities on NN and RCABS 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 NN with a short position of RCABS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN and RCABS.
Diversification Opportunities for NN and RCABS
Significant diversification
The 3 months correlation between NN and RCABS is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding NN Inc and RCABS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCABS Inc and NN 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 NN Inc are associated (or correlated) with RCABS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCABS Inc has no effect on the direction of NN i.e., NN and RCABS go up and down completely randomly.
Pair Corralation between NN and RCABS
Given the investment horizon of 90 days NN Inc is expected to generate 0.35 times more return on investment than RCABS. However, NN Inc is 2.82 times less risky than RCABS. It trades about -0.04 of its potential returns per unit of risk. RCABS Inc is currently generating about -0.06 per unit of risk. If you would invest 316.00 in NN Inc on December 1, 2024 and sell it today you would lose (16.00) from holding NN Inc or give up 5.06% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NN Inc vs. RCABS Inc
Performance |
Timeline |
NN Inc |
RCABS Inc |
NN and RCABS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NN and RCABS
The main advantage of trading using opposite NN and RCABS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NN position performs unexpectedly, RCABS 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 RCABS will offset losses from the drop in RCABS's long position.NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Stocks Directory Find actively traded stocks across global markets |