Correlation Between NVent Electric and Open Lending

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

By analyzing existing cross correlation between nVent Electric PLC and Open Lending Corp, you can compare the effects of market volatilities on NVent Electric and Open Lending 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 NVent Electric with a short position of Open Lending. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Open Lending.

Diversification Opportunities for NVent Electric and Open Lending

0.58

Correlation Coefficient

NVent Electric  Open Lending

Very weak diversification

The 3 months correlation between NVent and Open is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Open Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Lending Corp and NVent Electric 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 nVent Electric PLC are associated (or correlated) with Open Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Lending Corp has no effect on the direction of NVent Electric i.e., NVent Electric and Open Lending go up and down completely randomly.

Pair Corralation between NVent Electric and Open Lending

Considering the 90-day investment horizon nVent Electric PLC is expected to generate 0.56 times more return on investment than Open Lending. However, nVent Electric PLC is 1.79 times less risky than Open Lending. It trades about 0.2 of its potential returns per unit of risk. Open Lending Corp is currently generating about 0.06 per unit of risk. If you would invest  6,812  in nVent Electric PLC on May 14, 2025 and sell it today you would earn a total of  2,164  from holding nVent Electric PLC or generate 31.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

nVent Electric PLC  vs.  Open Lending Corp

nVent Electric PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in nVent Electric PLC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NVent Electric unveiled solid returns over the last few months and may actually be approaching a breakup point.

Open Lending Corp

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Open Lending Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Open Lending displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVent Electric and Open Lending

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

The idea behind nVent Electric PLC and Open Lending 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.