Correlation Between NI Holdings and Hawkins

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

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

Diversification Opportunities for NI Holdings and Hawkins

0.29

Correlation Coefficient

NI Holdings  Hawkins

Modest diversification

The 3 months correlation between NODK and Hawkins is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of NI Holdings i.e., NI Holdings and Hawkins go up and down completely randomly.

Pair Corralation between NI Holdings and Hawkins

Given the investment horizon of 90 days NI Holdings is expected to generate 1.61 times less return on investment than Hawkins. But when comparing it to its historical volatility, NI Holdings is 1.99 times less risky than Hawkins. It trades about 0.09 of its potential returns per unit of risk. Hawkins is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  12,196  in Hawkins on September 1, 2024 and sell it today you would earn a total of  1,255  from holding Hawkins or generate 10.29% return on investment over 90 days.

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

NI Holdings  vs.  Hawkins

NI Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, NI Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Hawkins

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward-looking signals, Hawkins may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with NI Holdings and Hawkins

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

The idea behind NI Holdings and Hawkins 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.