Correlation Between NI Holdings and Artisan Consumer

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

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

Diversification Opportunities for NI Holdings and Artisan Consumer

0.43

Correlation Coefficient

NI Holdings  Artisan Consumer

Very weak diversification

The 3 months correlation between NODK and Artisan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Artisan Consumer Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Consumer Goods 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 Artisan Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Consumer Goods has no effect on the direction of NI Holdings i.e., NI Holdings and Artisan Consumer go up and down completely randomly.

Pair Corralation between NI Holdings and Artisan Consumer

Given the investment horizon of 90 days NI Holdings is expected to generate 8.24 times less return on investment than Artisan Consumer. But when comparing it to its historical volatility, NI Holdings is 5.96 times less risky than Artisan Consumer. It trades about 0.18 of its potential returns per unit of risk. Artisan Consumer Goods is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Artisan Consumer Goods on February 17, 2024 and sell it today you would earn a total of  32.00  from holding Artisan Consumer Goods or generate 266.67% return on investment over 90 days.

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

NI Holdings  vs.  Artisan Consumer Goods

NI Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, NI Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Artisan Consumer Goods

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Consumer Goods are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Artisan Consumer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NI Holdings and Artisan Consumer

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

The idea behind NI Holdings and Artisan Consumer Goods 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.