Correlation Between NI Holdings and W R

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

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

Diversification Opportunities for NI Holdings and W R

0.68

Correlation Coefficient

NI Holdings  W R

Poor diversification

The 3 months correlation between NODK and WRB is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and W R Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W R Berkley 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 W R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W R Berkley has no effect on the direction of NI Holdings i.e., NI Holdings and W R go up and down completely randomly.

Pair Corralation between NI Holdings and W R

Given the investment horizon of 90 days NI Holdings is expected to generate 1.6 times more return on investment than W R. However, NI Holdings is 1.6 times more volatile than W R Berkley. It trades about 0.18 of its potential returns per unit of risk. W R Berkley is currently generating about 0.01 per unit of risk. If you would invest  1,574  in NI Holdings on September 16, 2024 and sell it today you would earn a total of  94.00  from holding NI Holdings or generate 5.97% return on investment over 90 days.

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

NI Holdings  vs.  W R Berkley

NI Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 9 (%) 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.

W R Berkley

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in W R Berkley are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, W R is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NI Holdings and W R

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

The idea behind NI Holdings and W R Berkley 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.