Correlation Between NI Holdings and EMBARQ

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

By analyzing existing cross correlation between NI Holdings and EMBARQ P 7995, you can compare the effects of market volatilities on NI Holdings and EMBARQ 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 EMBARQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and EMBARQ.

Diversification Opportunities for NI Holdings and EMBARQ

0.45

Correlation Coefficient

NI Holdings  EMBARQ

Very weak diversification

The 3 months correlation between NODK and EMBARQ is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and EMBARQ P 7995 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARQ P 7995 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 EMBARQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARQ P 7995 has no effect on the direction of NI Holdings i.e., NI Holdings and EMBARQ go up and down completely randomly.

Pair Corralation between NI Holdings and EMBARQ

Given the investment horizon of 90 days NI Holdings is expected to generate 0.32 times more return on investment than EMBARQ. However, NI Holdings is 3.12 times less risky than EMBARQ. It trades about 0.12 of its potential returns per unit of risk. EMBARQ P 7995 is currently generating about -0.06 per unit of risk. If you would invest  1,586  in NI Holdings on September 19, 2024 and sell it today you would earn a total of  64.00  from holding NI Holdings or generate 4.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

NI Holdings  vs.  EMBARQ P 7995

NI Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, NI Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

EMBARQ P 7995

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMBARQ P 7995 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EMBARQ is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NI Holdings and EMBARQ

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

The idea behind NI Holdings and EMBARQ P 7995 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.