Correlation Between NMI Holdings and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Keysight Technologies 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 Keysight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Keysight Technologies, you can compare the effects of market volatilities on NMI Holdings and Keysight Technologies 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 Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Keysight Technologies.
Diversification Opportunities for NMI Holdings and Keysight Technologies
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NMI and Keysight is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies 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 Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of NMI Holdings i.e., NMI Holdings and Keysight Technologies go up and down completely randomly.
Pair Corralation between NMI Holdings and Keysight Technologies
Assuming the 90 days horizon NMI Holdings is expected to generate 0.74 times more return on investment than Keysight Technologies. However, NMI Holdings is 1.35 times less risky than Keysight Technologies. It trades about 0.11 of its potential returns per unit of risk. Keysight Technologies is currently generating about 0.05 per unit of risk. If you would invest 2,560 in NMI Holdings on September 3, 2024 and sell it today you would earn a total of 1,200 from holding NMI Holdings or generate 46.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Keysight Technologies
Performance |
| Timeline |
| NMI Holdings |
| Keysight Technologies |
NMI Holdings and Keysight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Keysight Technologies
The main advantage of trading using opposite NMI Holdings and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Keysight Technologies 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
| Keysight Technologies vs. Neinor Homes SA | Keysight Technologies vs. Gamma Communications plc | Keysight Technologies vs. MAVEN WIRELESS SWEDEN | Keysight Technologies vs. Cogent Communications 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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