Correlation Between NI Holdings and National Research

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

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

Diversification Opportunities for NI Holdings and National Research

0.66

Correlation Coefficient

NI Holdings  National Research

Poor diversification

The 3 months correlation between NODK and National is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and National Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Research Corp 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 National Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Research Corp has no effect on the direction of NI Holdings i.e., NI Holdings and National Research go up and down completely randomly.

Pair Corralation between NI Holdings and National Research

Given the investment horizon of 90 days NI Holdings is expected to generate 0.5 times more return on investment than National Research. However, NI Holdings is 1.98 times less risky than National Research. It trades about -0.09 of its potential returns per unit of risk. National Research Corp is currently generating about -0.15 per unit of risk. If you would invest  1,567  in NI Holdings on December 28, 2024 and sell it today you would lose (142.00) from holding NI Holdings or give up 9.06% of portfolio value over 90 days.

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

NI Holdings  vs.  National Research Corp

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.

National Research Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Research Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NI Holdings and National Research

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

The idea behind NI Holdings and National Research Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.