Correlation Between NMI Holdings and Gaming
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Gaming 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 Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Gaming and Leisure, you can compare the effects of market volatilities on NMI Holdings and Gaming 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 Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Gaming.
Diversification Opportunities for NMI Holdings and Gaming
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and Gaming is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure 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 Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of NMI Holdings i.e., NMI Holdings and Gaming go up and down completely randomly.
Pair Corralation between NMI Holdings and Gaming
Assuming the 90 days horizon NMI Holdings is expected to generate 1.42 times more return on investment than Gaming. However, NMI Holdings is 1.42 times more volatile than Gaming and Leisure. It trades about 0.11 of its potential returns per unit of risk. Gaming and Leisure is currently generating about 0.14 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 | Insignificant |
| Accuracy | 99.24% |
| Values | Daily Returns |
NMI Holdings vs. Gaming and Leisure
Performance |
| Timeline |
| NMI Holdings |
| Gaming and Leisure |
NMI Holdings and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Gaming
The main advantage of trading using opposite NMI Holdings and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| Gaming vs. YATRA ONLINE DL 0001 | Gaming vs. Lamar Advertising | Gaming vs. Columbia Sportswear | Gaming vs. Transportadora de Gas |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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