Correlation Between Interactive Brokers and NN Group

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

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

Diversification Opportunities for Interactive Brokers and NN Group

-0.59

Correlation Coefficient

Interactive Brokers  NN Group

Excellent diversification

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

Pair Corralation between Interactive Brokers and NN Group

Given the investment horizon of 90 days Interactive Brokers Group is expected to generate 1.72 times more return on investment than NN Group. However, Interactive Brokers is 1.72 times more volatile than NN Group NV. It trades about 0.33 of its potential returns per unit of risk. NN Group NV is currently generating about -0.05 per unit of risk. If you would invest  12,740  in Interactive Brokers Group on August 31, 2024 and sell it today you would earn a total of  6,391  from holding Interactive Brokers Group or generate 50.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Interactive Brokers Group  vs.  NN Group NV

Interactive Brokers

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Brokers Group are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, Interactive Brokers reported solid returns over the last few months and may actually be approaching a breakup point.

NN Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NN Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Interactive Brokers and NN Group

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

The idea behind Interactive Brokers Group and NN Group NV 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.