Correlation Between NMI Holdings and Yum China
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Yum China 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 Yum China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Yum China Holdings, you can compare the effects of market volatilities on NMI Holdings and Yum China 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 Yum China. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Yum China.
Diversification Opportunities for NMI Holdings and Yum China
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Yum is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Yum China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum China Holdings 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 Yum China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum China Holdings has no effect on the direction of NMI Holdings i.e., NMI Holdings and Yum China go up and down completely randomly.
Pair Corralation between NMI Holdings and Yum China
Assuming the 90 days horizon NMI Holdings is expected to generate 1.17 times more return on investment than Yum China. However, NMI Holdings is 1.17 times more volatile than Yum China Holdings. It trades about 0.27 of its potential returns per unit of risk. Yum China Holdings is currently generating about 0.02 per unit of risk. If you would invest 3,360 in NMI Holdings on September 5, 2024 and sell it today you would earn a total of 420.00 from holding NMI Holdings or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NMI Holdings vs. Yum China Holdings
Performance |
| Timeline |
| NMI Holdings |
| Yum China Holdings |
NMI Holdings and Yum China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Yum China
The main advantage of trading using opposite NMI Holdings and Yum China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Yum China 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 Yum China will offset losses from the drop in Yum China's long position.| NMI Holdings vs. HYATT HOTELS A | NMI Holdings vs. Pebblebrook Hotel Trust | NMI Holdings vs. Penta Ocean Construction Co | NMI Holdings vs. Dalata Hotel Group |
| Yum China vs. McDonalds | Yum China vs. Chipotle Mexican Grill | Yum China vs. Superior Plus Corp | Yum China vs. NMI Holdings |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |