Correlation Between 2G ENERGY and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both 2G ENERGY 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 2G ENERGY and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2G ENERGY and NMI Holdings, you can compare the effects of market volatilities on 2G ENERGY 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 2G ENERGY with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2G ENERGY and NMI Holdings.
Diversification Opportunities for 2G ENERGY and NMI Holdings
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 2GB and NMI is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding 2G ENERGY and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and 2G ENERGY 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 2G ENERGY 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 2G ENERGY i.e., 2G ENERGY and NMI Holdings go up and down completely randomly.
Pair Corralation between 2G ENERGY and NMI Holdings
Assuming the 90 days trading horizon 2G ENERGY is expected to under-perform the NMI Holdings. In addition to that, 2G ENERGY is 1.27 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 0.07 per unit of volatility. If you would invest 3,580 in NMI Holdings on August 29, 2024 and sell it today you would earn a total of 100.00 from holding NMI Holdings or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
2G ENERGY vs. NMI Holdings
Performance |
| Timeline |
| 2G ENERGY |
| NMI Holdings |
2G ENERGY and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2G ENERGY and NMI Holdings
The main advantage of trading using opposite 2G ENERGY and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2G ENERGY 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.| 2G ENERGY vs. FISH PAYK HEALTH | 2G ENERGY vs. GREENX METALS LTD | 2G ENERGY vs. Lion One Metals | 2G ENERGY vs. Zijin Mining Group |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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