Correlation Between Shoals Technologies and NN

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

By analyzing existing cross correlation between Shoals Technologies Group and NN Inc, you can compare the effects of market volatilities on Shoals Technologies and NN 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 Shoals Technologies with a short position of NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoals Technologies and NN.

Diversification Opportunities for Shoals Technologies and NN

-0.59

Correlation Coefficient

Shoals Technologies  NN

Excellent diversification

The 3 months correlation between Shoals and NN is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shoals Technologies Group and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Shoals Technologies 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 Shoals Technologies Group are associated (or correlated) with NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Shoals Technologies i.e., Shoals Technologies and NN go up and down completely randomly.

Pair Corralation between Shoals Technologies and NN

Given the investment horizon of 90 days Shoals Technologies Group is expected to under-perform the NN. In addition to that, Shoals Technologies is 1.17 times more volatile than NN Inc. It trades about -0.05 of its total potential returns per unit of risk. NN Inc is currently generating about -0.01 per unit of volatility. If you would invest  420.00  in NN Inc on October 7, 2024 and sell it today you would lose (90.00) from holding NN Inc or give up 21.43% of portfolio value over 90 days.

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

Shoals Technologies Group  vs.  NN Inc

Shoals Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shoals Technologies Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Shoals Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

NN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Shoals Technologies and NN

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

The idea behind Shoals Technologies Group and NN Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.