Correlation Between Inspire Medical and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Inspire Medical and NMI 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 Inspire Medical and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspire Medical Systems and NMI Holdings, you can compare the effects of market volatilities on Inspire Medical and NMI 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 Inspire Medical with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and NMI Holdings.
Diversification Opportunities for Inspire Medical and NMI Holdings
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Inspire and NMI is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Inspire Medical 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 Inspire Medical Systems are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of Inspire Medical i.e., Inspire Medical and NMI Holdings go up and down completely randomly.
Pair Corralation between Inspire Medical and NMI Holdings
Assuming the 90 days horizon Inspire Medical Systems is expected to generate 2.65 times more return on investment than NMI Holdings. However, Inspire Medical is 2.65 times more volatile than NMI Holdings. It trades about 0.03 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.07 per unit of risk. If you would invest 16,700 in Inspire Medical Systems on October 16, 2024 and sell it today you would earn a total of 1,060 from holding Inspire Medical Systems or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Inspire Medical Systems vs. NMI Holdings
Performance |
| Timeline |
| Inspire Medical Systems |
| NMI Holdings |
Inspire Medical and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspire Medical and NMI Holdings
The main advantage of trading using opposite Inspire Medical and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire Medical position performs unexpectedly, NMI 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| Inspire Medical vs. SOUTHWEST AIRLINES | Inspire Medical vs. JAPAN AIRLINES | Inspire Medical vs. SINGAPORE AIRLINES | Inspire Medical vs. OFFICE DEPOT |
| NMI Holdings vs. CARDINAL HEALTH | NMI Holdings vs. NorAm Drilling AS | NMI Holdings vs. CVS Health | NMI Holdings vs. The Boston Beer |
Check out your portfolio center.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.
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