Correlation Between NV5 Global and IES Holdings

Can any of the company-specific risk be diversified away by investing in both NV5 Global and IES Holdings 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 NV5 Global and IES Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NV5 Global and IES Holdings, you can compare the effects of market volatilities on NV5 Global and IES Holdings 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 NV5 Global with a short position of IES Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NV5 Global and IES Holdings.

Diversification Opportunities for NV5 Global and IES Holdings

0.7

Correlation Coefficient

NV5 Global  IES Holdings

Poor diversification

The 3 months correlation between NV5 and IES is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NV5 Global and IES Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IES Holdings and NV5 Global 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 NV5 Global are associated (or correlated) with IES Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IES Holdings has no effect on the direction of NV5 Global i.e., NV5 Global and IES Holdings go up and down completely randomly.

Pair Corralation between NV5 Global and IES Holdings

Given the investment horizon of 90 days NV5 Global is expected to generate 0.32 times more return on investment than IES Holdings. However, NV5 Global is 3.11 times less risky than IES Holdings. It trades about -0.16 of its potential returns per unit of risk. IES Holdings is currently generating about -0.13 per unit of risk. If you would invest  2,176  in NV5 Global on November 29, 2024 and sell it today you would lose (348.00) from holding NV5 Global or give up 15.99% of portfolio value over 90 days.

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

NV5 Global  vs.  IES Holdings

NV5 Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days NV5 Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

IES Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NV5 Global and IES Holdings

The main advantage of trading using opposite NV5 Global and IES Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NV5 Global position performs unexpectedly, IES Holdings 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 IES Holdings will offset losses from the drop in IES Holdings' long position.

The idea behind NV5 Global and IES Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.