Correlation Between NI Holdings and Employers Holdings

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

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

Diversification Opportunities for NI Holdings and Employers Holdings

0.71

Correlation Coefficient

NI Holdings  Employers Holdings

Poor diversification

The 3 months correlation between NODK and Employers is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Employers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Employers Holdings and NI Holdings 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 NI Holdings are associated (or correlated) with Employers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Employers Holdings has no effect on the direction of NI Holdings i.e., NI Holdings and Employers Holdings go up and down completely randomly.

Pair Corralation between NI Holdings and Employers Holdings

Given the investment horizon of 90 days NI Holdings is expected to generate 0.87 times more return on investment than Employers Holdings. However, NI Holdings is 1.15 times less risky than Employers Holdings. It trades about 0.11 of its potential returns per unit of risk. Employers Holdings is currently generating about 0.09 per unit of risk. If you would invest  1,515  in NI Holdings on September 18, 2024 and sell it today you would earn a total of  145.00  from holding NI Holdings or generate 9.57% return on investment over 90 days.

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

NI Holdings  vs.  Employers Holdings

NI Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, NI Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Employers Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Employers Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Employers Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NI Holdings and Employers Holdings

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

The idea behind NI Holdings and Employers Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.