Correlation Between NFI and Vicinity

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

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

Diversification Opportunities for NFI and Vicinity

0.89

Correlation Coefficient

NFI  Vicinity

Very poor diversification

The 3 months correlation between NFI and Vicinity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NFI Group and Vicinity Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Motor Corp and NFI 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 NFI Group are associated (or correlated) with Vicinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Motor Corp has no effect on the direction of NFI i.e., NFI and Vicinity go up and down completely randomly.

Pair Corralation between NFI and Vicinity

Assuming the 90 days horizon NFI Group is expected to generate 0.08 times more return on investment than Vicinity. However, NFI Group is 11.77 times less risky than Vicinity. It trades about -0.27 of its potential returns per unit of risk. Vicinity Motor Corp is currently generating about -0.13 per unit of risk. If you would invest  1,338  in NFI Group on September 16, 2024 and sell it today you would lose (374.00) from holding NFI Group or give up 27.95% of portfolio value over 90 days.

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

NFI Group  vs.  Vicinity Motor Corp

NFI Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFI Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vicinity Motor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vicinity Motor Corp 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 fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with NFI and Vicinity

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

The idea behind NFI Group and Vicinity Motor 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 Commodity Directory module to find actively traded commodities issued by global exchanges.