Correlation Between SolarEdge Technologies and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both SolarEdge Technologies 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 SolarEdge Technologies and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolarEdge Technologies and NMI Holdings, you can compare the effects of market volatilities on SolarEdge Technologies 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 SolarEdge Technologies with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolarEdge Technologies and NMI Holdings.
Diversification Opportunities for SolarEdge Technologies and NMI Holdings
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SolarEdge and NMI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SolarEdge Technologies and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and SolarEdge Technologies 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 SolarEdge Technologies 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 SolarEdge Technologies i.e., SolarEdge Technologies and NMI Holdings go up and down completely randomly.
Pair Corralation between SolarEdge Technologies and NMI Holdings
Assuming the 90 days horizon SolarEdge Technologies is expected to under-perform the NMI Holdings. In addition to that, SolarEdge Technologies is 3.63 times more volatile than NMI Holdings. It trades about -0.06 of its total potential returns per unit of risk. NMI Holdings is currently generating about 0.02 per unit of volatility. If you would invest 3,700 in NMI Holdings on September 2, 2024 and sell it today you would earn a total of 60.00 from holding NMI Holdings or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolarEdge Technologies vs. NMI Holdings
Performance |
| Timeline |
| SolarEdge Technologies |
| NMI Holdings |
SolarEdge Technologies and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolarEdge Technologies and NMI Holdings
The main advantage of trading using opposite SolarEdge Technologies and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolarEdge Technologies 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.| SolarEdge Technologies vs. Xinyi Solar Holdings | SolarEdge Technologies vs. Superior Plus Corp | SolarEdge Technologies vs. NMI Holdings | SolarEdge Technologies vs. Origin Agritech |
| NMI Holdings vs. Taylor Morrison Home | NMI Holdings vs. ATRYS HEALTH SA | NMI Holdings vs. National Health Investors | NMI Holdings vs. Bumrungrad Hospital Public |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |