Correlation Between NMI Holdings and Omeros
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Omeros 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 Omeros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Omeros, you can compare the effects of market volatilities on NMI Holdings and Omeros 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 Omeros. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Omeros.
Diversification Opportunities for NMI Holdings and Omeros
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and Omeros is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Omeros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omeros 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 Omeros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omeros has no effect on the direction of NMI Holdings i.e., NMI Holdings and Omeros go up and down completely randomly.
Pair Corralation between NMI Holdings and Omeros
Assuming the 90 days horizon NMI Holdings is expected to generate 2.88 times less return on investment than Omeros. But when comparing it to its historical volatility, NMI Holdings is 4.64 times less risky than Omeros. It trades about 0.09 of its potential returns per unit of risk. Omeros is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 544.00 in Omeros on September 9, 2024 and sell it today you would earn a total of 542.00 from holding Omeros or generate 99.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Omeros
Performance |
| Timeline |
| NMI Holdings |
| Omeros |
NMI Holdings and Omeros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Omeros
The main advantage of trading using opposite NMI Holdings and Omeros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Omeros 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 Omeros will offset losses from the drop in Omeros' long position.| NMI Holdings vs. Public Storage | NMI Holdings vs. DATANG INTL POW | NMI Holdings vs. Datang International Power | NMI Holdings vs. NTT DATA |
| Omeros vs. Check Point Software | Omeros vs. CENTURIA OFFICE REIT | Omeros vs. MACOM Technology Solutions | Omeros vs. Internet Thailand PCL |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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