Correlation Between NI Holdings and Amalgamated Bank

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

By analyzing existing cross correlation between NI Holdings and Amalgamated Bank, you can compare the effects of market volatilities on NI Holdings and Amalgamated Bank 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 NI Holdings with a short position of Amalgamated Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Amalgamated Bank.

Diversification Opportunities for NI Holdings and Amalgamated Bank

0.3

Correlation Coefficient

NI Holdings  Amalgamated Bank

Weak diversification

The 3 months correlation between NODK and Amalgamated is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Amalgamated Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amalgamated Bank and NI Holdings 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 NI Holdings are associated (or correlated) with Amalgamated Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amalgamated Bank has no effect on the direction of NI Holdings i.e., NI Holdings and Amalgamated Bank go up and down completely randomly.

Pair Corralation between NI Holdings and Amalgamated Bank

Given the investment horizon of 90 days NI Holdings is expected to generate 0.54 times more return on investment than Amalgamated Bank. However, NI Holdings is 1.86 times less risky than Amalgamated Bank. It trades about -0.24 of its potential returns per unit of risk. Amalgamated Bank is currently generating about -0.18 per unit of risk. If you would invest  1,501  in NI Holdings on December 5, 2024 and sell it today you would lose (92.00) from holding NI Holdings or give up 6.13% of portfolio value over 90 days.

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

NI Holdings  vs.  Amalgamated Bank

NI Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days NI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amalgamated Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amalgamated Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with NI Holdings and Amalgamated Bank

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

The idea behind NI Holdings and Amalgamated Bank 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.