Correlation Between NI Holdings and Everspin Technologies

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

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

Diversification Opportunities for NI Holdings and Everspin Technologies

0.47

Correlation Coefficient

NI Holdings  Everspin Technologies

Very weak diversification

The 3 months correlation between NODK and Everspin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies 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 Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of NI Holdings i.e., NI Holdings and Everspin Technologies go up and down completely randomly.

Pair Corralation between NI Holdings and Everspin Technologies

Given the investment horizon of 90 days NI Holdings is expected to under-perform the Everspin Technologies. But the stock apears to be less risky and, when comparing its historical volatility, NI Holdings is 1.24 times less risky than Everspin Technologies. The stock trades about -0.18 of its potential returns per unit of risk. The Everspin Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  608.00  in Everspin Technologies on September 22, 2024 and sell it today you would earn a total of  15.00  from holding Everspin Technologies or generate 2.47% return on investment over 90 days.

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

NI Holdings  vs.  Everspin Technologies

NI Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 1 (%) 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 recent stock price mess, may contribute to short-term losses for the institutional investors.

Everspin Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Everspin Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NI Holdings and Everspin Technologies

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

The idea behind NI Holdings and Everspin Technologies 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.