Correlation Between NI Holdings and EON Resources

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

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

Diversification Opportunities for NI Holdings and EON Resources

-0.44

Correlation Coefficient

NI Holdings  EON Resources

Very good diversification

The 3 months correlation between NODK and EON is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and EON Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON Resources 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 EON Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON Resources has no effect on the direction of NI Holdings i.e., NI Holdings and EON Resources go up and down completely randomly.

Pair Corralation between NI Holdings and EON Resources

Given the investment horizon of 90 days NI Holdings is expected to generate 0.07 times more return on investment than EON Resources. However, NI Holdings is 13.35 times less risky than EON Resources. It trades about 0.07 of its potential returns per unit of risk. EON Resources is currently generating about 0.0 per unit of risk. If you would invest  1,504  in NI Holdings on September 4, 2024 and sell it today you would earn a total of  75.00  from holding NI Holdings or generate 4.99% return on investment over 90 days.

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

NI Holdings  vs.  EON Resources

NI Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, NI Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

EON Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EON Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, EON Resources 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 EON Resources

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

The idea behind NI Holdings and EON Resources 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.