Correlation Between PF Industries and Nobility Homes

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

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

Diversification Opportunities for PF Industries and Nobility Homes

0.43

Correlation Coefficient

PF Industries  Nobility Homes

Very weak diversification

The 3 months correlation between PFIN and Nobility is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding PF Industries and Nobility Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nobility Homes and PF Industries 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 PF Industries are associated (or correlated) with Nobility Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nobility Homes has no effect on the direction of PF Industries i.e., PF Industries and Nobility Homes go up and down completely randomly.

Pair Corralation between PF Industries and Nobility Homes

If you would invest  2,780  in Nobility Homes on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Nobility Homes or generate 0.0% return on investment over 90 days.

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

PF Industries  vs.  Nobility Homes

PF Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PF Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, PF Industries is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Nobility Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nobility Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Nobility Homes is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with PF Industries and Nobility Homes

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

The idea behind PF Industries and Nobility Homes 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.