Correlation Between NMI Holdings and DEXUS
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and DEXUS 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 NMI Holdings and DEXUS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and DEXUS, you can compare the effects of market volatilities on NMI Holdings and DEXUS 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 NMI Holdings with a short position of DEXUS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and DEXUS.
Diversification Opportunities for NMI Holdings and DEXUS
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NMI and DEXUS is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and DEXUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEXUS and NMI Holdings 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 NMI Holdings are associated (or correlated) with DEXUS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEXUS has no effect on the direction of NMI Holdings i.e., NMI Holdings and DEXUS go up and down completely randomly.
Pair Corralation between NMI Holdings and DEXUS
Assuming the 90 days horizon NMI Holdings is expected to generate 0.9 times more return on investment than DEXUS. However, NMI Holdings is 1.11 times less risky than DEXUS. It trades about 0.11 of its potential returns per unit of risk. DEXUS is currently generating about 0.07 per unit of risk. If you would invest 3,060 in NMI Holdings on September 1, 2024 and sell it today you would earn a total of 720.00 from holding NMI Holdings or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
NMI Holdings vs. DEXUS
Performance |
| Timeline |
| NMI Holdings |
| DEXUS |
NMI Holdings and DEXUS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and DEXUS
The main advantage of trading using opposite NMI Holdings and DEXUS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, DEXUS 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 DEXUS will offset losses from the drop in DEXUS's long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| DEXUS vs. CapitaLand Investment Limited | DEXUS vs. MGIC INVESTMENT | DEXUS vs. EAT WELL INVESTMENT | DEXUS vs. MTI WIRELESS EDGE |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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