Correlation Between NI Holdings and MYT Netherlands

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

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

Diversification Opportunities for NI Holdings and MYT Netherlands

-0.7

Correlation Coefficient

NI Holdings  MYT Netherlands

Excellent diversification

The 3 months correlation between NODK and MYT is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and MYT Netherlands Parent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYT Netherlands Parent 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 MYT Netherlands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYT Netherlands Parent has no effect on the direction of NI Holdings i.e., NI Holdings and MYT Netherlands go up and down completely randomly.

Pair Corralation between NI Holdings and MYT Netherlands

Given the investment horizon of 90 days NI Holdings is expected to under-perform the MYT Netherlands. But the stock apears to be less risky and, when comparing its historical volatility, NI Holdings is 2.96 times less risky than MYT Netherlands. The stock trades about -0.15 of its potential returns per unit of risk. The MYT Netherlands Parent is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  763.00  in MYT Netherlands Parent on December 17, 2024 and sell it today you would earn a total of  115.00  from holding MYT Netherlands Parent or generate 15.07% return on investment over 90 days.

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

NI Holdings  vs.  MYT Netherlands Parent

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.

MYT Netherlands Parent

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MYT Netherlands Parent are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, MYT Netherlands exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NI Holdings and MYT Netherlands

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

The idea behind NI Holdings and MYT Netherlands Parent 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.