Correlation Between National Research and Premier

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

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

Diversification Opportunities for National Research and Premier

-0.16

Correlation Coefficient

National Research  Premier

Good diversification

The 3 months correlation between National and Premier is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding National Research Corp and Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier and National Research 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 National Research Corp are associated (or correlated) with Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier has no effect on the direction of National Research i.e., National Research and Premier go up and down completely randomly.

Pair Corralation between National Research and Premier

Considering the 90-day investment horizon National Research Corp is expected to under-perform the Premier. In addition to that, National Research is 1.65 times more volatile than Premier. It trades about -0.11 of its total potential returns per unit of risk. Premier is currently generating about 0.06 per unit of volatility. If you would invest  2,009  in Premier on September 3, 2024 and sell it today you would earn a total of  281.00  from holding Premier or generate 13.99% return on investment over 90 days.

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

National Research Corp  vs.  Premier

National Research Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Research Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Premier

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with National Research and Premier

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

The idea behind National Research Corp and Premier 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.