Correlation Between NN and Matthews International

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

By analyzing existing cross correlation between NN Inc and Matthews International, you can compare the effects of market volatilities on NN and Matthews International 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 Matthews International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN and Matthews International.

Diversification Opportunities for NN and Matthews International

0.27

Correlation Coefficient

NN  Matthews International

Modest diversification

The 3 months correlation between NN and Matthews is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NN Inc and Matthews International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International 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 Matthews International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews International has no effect on the direction of NN i.e., NN and Matthews International go up and down completely randomly.

Pair Corralation between NN and Matthews International

Given the investment horizon of 90 days NN Inc is expected to under-perform the Matthews International. In addition to that, NN is 1.32 times more volatile than Matthews International. It trades about -0.1 of its total potential returns per unit of risk. Matthews International is currently generating about -0.06 per unit of volatility. If you would invest  2,743  in Matthews International on December 28, 2024 and sell it today you would lose (407.00) from holding Matthews International or give up 14.84% of portfolio value over 90 days.

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

NN Inc  vs.  Matthews International

NN Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Matthews International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matthews International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with NN and Matthews International

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

The idea behind NN Inc and Matthews International 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.