Correlation Between NI Holdings and Conifer Holding

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

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

Diversification Opportunities for NI Holdings and Conifer Holding

0.25

Correlation Coefficient

NI Holdings  Conifer Holding

Modest diversification

The 3 months correlation between NODK and Conifer is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Conifer Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conifer Holding 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 Conifer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conifer Holding has no effect on the direction of NI Holdings i.e., NI Holdings and Conifer Holding go up and down completely randomly.

Pair Corralation between NI Holdings and Conifer Holding

Given the investment horizon of 90 days NI Holdings is expected to under-perform the Conifer Holding. But the stock apears to be less risky and, when comparing its historical volatility, NI Holdings is 2.23 times less risky than Conifer Holding. The stock trades about -0.38 of its potential returns per unit of risk. The Conifer Holding is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  114.00  in Conifer Holding on October 10, 2024 and sell it today you would lose (8.00) from holding Conifer Holding or give up 7.02% 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.  Conifer Holding

NI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Conifer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conifer Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Conifer Holding is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with NI Holdings and Conifer Holding

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

The idea behind NI Holdings and Conifer Holding 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.