Correlation Between NMI Holdings and NN Group
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and NN Group 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 NN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and NN Group NV, you can compare the effects of market volatilities on NMI Holdings and NN Group 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 NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and NN Group.
Diversification Opportunities for NMI Holdings and NN Group
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and 2NN is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV 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 NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of NMI Holdings i.e., NMI Holdings and NN Group go up and down completely randomly.
Pair Corralation between NMI Holdings and NN Group
Assuming the 90 days horizon NMI Holdings is expected to generate 2.38 times more return on investment than NN Group. However, NMI Holdings is 2.38 times more volatile than NN Group NV. It trades about 0.11 of its potential returns per unit of risk. NN Group NV is currently generating about -0.12 per unit of risk. If you would invest 3,580 in NMI Holdings on September 1, 2024 and sell it today you would earn a total of 200.00 from holding NMI Holdings or generate 5.59% 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. NN Group NV
Performance |
| Timeline |
| NMI Holdings |
| NN Group NV |
NMI Holdings and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and NN Group
The main advantage of trading using opposite NMI Holdings and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, NN Group 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 NN Group will offset losses from the drop in NN Group's long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| NN Group vs. AIR PRODCHEMICALS | NN Group vs. Mitsubishi Gas Chemical | NN Group vs. NISSAN CHEMICAL IND | NN Group vs. MagnaChip Semiconductor Corp |
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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