Correlation Between Rai Way and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Rai Way 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 Rai Way and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rai Way SpA and NMI Holdings, you can compare the effects of market volatilities on Rai Way 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 Rai Way with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rai Way and NMI Holdings.
Diversification Opportunities for Rai Way and NMI Holdings
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rai and NMI is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Rai Way SpA and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Rai Way 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 Rai Way SpA 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 Rai Way i.e., Rai Way and NMI Holdings go up and down completely randomly.
Pair Corralation between Rai Way and NMI Holdings
Assuming the 90 days horizon Rai Way SpA is expected to generate 1.2 times more return on investment than NMI Holdings. However, Rai Way is 1.2 times more volatile than NMI Holdings. It trades about 0.01 of its potential returns per unit of risk. NMI Holdings is currently generating about -0.28 per unit of risk. If you would invest 555.00 in Rai Way SpA on November 29, 2024 and sell it today you would earn a total of 1.00 from holding Rai Way SpA or generate 0.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rai Way SpA vs. NMI Holdings
Performance |
| Timeline |
| Rai Way SpA |
| NMI Holdings |
Rai Way and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rai Way and NMI Holdings
The main advantage of trading using opposite Rai Way and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rai Way 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.| Rai Way vs. MEDICAL FACILITIES NEW | Rai Way vs. Tencent Music Entertainment | Rai Way vs. CVR Medical Corp | Rai Way vs. East Africa Metals |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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