Correlation Between NI Holdings and Trump Media

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

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

Diversification Opportunities for NI Holdings and Trump Media

0.23

Correlation Coefficient

NI Holdings  Trump Media

Modest diversification

The 3 months correlation between NODK and Trump is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Trump Media Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trump Media Technology 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 Trump Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trump Media Technology has no effect on the direction of NI Holdings i.e., NI Holdings and Trump Media go up and down completely randomly.

Pair Corralation between NI Holdings and Trump Media

Given the investment horizon of 90 days NI Holdings is expected to generate 23.0 times less return on investment than Trump Media. But when comparing it to its historical volatility, NI Holdings is 5.64 times less risky than Trump Media. It trades about 0.01 of its potential returns per unit of risk. Trump Media Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,315  in Trump Media Technology on December 2, 2024 and sell it today you would lose (254.00) from holding Trump Media Technology or give up 10.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.14%
Values	Daily Returns

NI Holdings  vs.  Trump Media Technology

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 latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Trump Media Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trump Media Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Trump Media is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with NI Holdings and Trump Media

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

The idea behind NI Holdings and Trump Media Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.