Correlation Between NMI Holdings and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Citizens Financial 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 Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Citizens Financial Group, you can compare the effects of market volatilities on NMI Holdings and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Citizens Financial.
Diversification Opportunities for NMI Holdings and Citizens Financial
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Citizens is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of NMI Holdings i.e., NMI Holdings and Citizens Financial go up and down completely randomly.
Pair Corralation between NMI Holdings and Citizens Financial
Assuming the 90 days horizon NMI Holdings is expected to generate 8.87 times less return on investment than Citizens Financial. But when comparing it to its historical volatility, NMI Holdings is 1.03 times less risky than Citizens Financial. It trades about 0.04 of its potential returns per unit of risk. Citizens Financial Group is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 3,800 in Citizens Financial Group on August 29, 2024 and sell it today you would earn a total of 801.00 from holding Citizens Financial Group or generate 21.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Citizens Financial Group
Performance |
| Timeline |
| NMI Holdings |
| Citizens Financial |
NMI Holdings and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Citizens Financial
The main advantage of trading using opposite NMI Holdings and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
| Citizens Financial vs. ScanSource | Citizens Financial vs. Ameriprise Financial | Citizens Financial vs. PT Bank Maybank | Citizens Financial vs. CPU SOFTWAREHOUSE |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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