Correlation Between NMI Holdings and TRAINLINE PLC
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and TRAINLINE PLC 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 TRAINLINE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and TRAINLINE PLC LS, you can compare the effects of market volatilities on NMI Holdings and TRAINLINE PLC 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 TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and TRAINLINE PLC.
Diversification Opportunities for NMI Holdings and TRAINLINE PLC
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NMI and TRAINLINE is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS 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 TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of NMI Holdings i.e., NMI Holdings and TRAINLINE PLC go up and down completely randomly.
Pair Corralation between NMI Holdings and TRAINLINE PLC
Assuming the 90 days horizon NMI Holdings is expected to generate 0.6 times more return on investment than TRAINLINE PLC. However, NMI Holdings is 1.68 times less risky than TRAINLINE PLC. It trades about 0.09 of its potential returns per unit of risk. TRAINLINE PLC LS is currently generating about 0.04 per unit of risk. If you would invest 1,970 in NMI Holdings on August 28, 2024 and sell it today you would earn a total of 1,670 from holding NMI Holdings or generate 84.77% 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. TRAINLINE PLC LS
Performance |
| Timeline |
| NMI Holdings |
| TRAINLINE PLC LS |
NMI Holdings and TRAINLINE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and TRAINLINE PLC
The main advantage of trading using opposite NMI Holdings and TRAINLINE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, TRAINLINE PLC 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 TRAINLINE PLC will offset losses from the drop in TRAINLINE PLC'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 |
| TRAINLINE PLC vs. Superior Plus Corp | TRAINLINE PLC vs. NMI Holdings | TRAINLINE PLC vs. Origin Agritech | TRAINLINE PLC vs. SIVERS SEMICONDUCTORS AB |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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