Correlation Between Dixie and Nuvve Holding

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

By analyzing existing cross correlation between The Dixie Group and Nuvve Holding Corp, you can compare the effects of market volatilities on Dixie and Nuvve Holding 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 Dixie with a short position of Nuvve Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dixie and Nuvve Holding.

Diversification Opportunities for Dixie and Nuvve Holding

-0.35

Correlation Coefficient

Dixie  Nuvve Holding

Very good diversification

The 3 months correlation between Dixie and Nuvve is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Dixie Group and Nuvve Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvve Holding Corp and Dixie 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 The Dixie Group are associated (or correlated) with Nuvve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvve Holding Corp has no effect on the direction of Dixie i.e., Dixie and Nuvve Holding go up and down completely randomly.

Pair Corralation between Dixie and Nuvve Holding

Given the investment horizon of 90 days The Dixie Group is expected to generate 0.58 times more return on investment than Nuvve Holding. However, The Dixie Group is 1.72 times less risky than Nuvve Holding. It trades about 0.02 of its potential returns per unit of risk. Nuvve Holding Corp is currently generating about -0.03 per unit of risk. If you would invest  102.00  in The Dixie Group on September 3, 2024 and sell it today you would lose (23.00) from holding The Dixie Group or give up 22.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.92%
Values	Daily Returns

The Dixie Group  vs.  Nuvve Holding Corp

Dixie Group

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days The Dixie Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Dixie displayed solid returns over the last few months and may actually be approaching a breakup point.

Nuvve Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvve Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Nuvve Holding is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dixie and Nuvve Holding

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

The idea behind The Dixie Group and Nuvve Holding Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.