Correlation Between NMI Holdings and CTP NV
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and CTP NV 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 CTP NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and CTP NV EO, you can compare the effects of market volatilities on NMI Holdings and CTP NV 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 CTP NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and CTP NV.
Diversification Opportunities for NMI Holdings and CTP NV
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and CTP is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and CTP NV EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTP NV EO 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 CTP NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTP NV EO has no effect on the direction of NMI Holdings i.e., NMI Holdings and CTP NV go up and down completely randomly.
Pair Corralation between NMI Holdings and CTP NV
Assuming the 90 days horizon NMI Holdings is expected to generate 1.05 times more return on investment than CTP NV. However, NMI Holdings is 1.05 times more volatile than CTP NV EO. It trades about 0.1 of its potential returns per unit of risk. CTP NV EO is currently generating about 0.06 per unit of risk. If you would invest 1,860 in NMI Holdings on September 2, 2024 and sell it today you would earn a total of 1,900 from holding NMI Holdings or generate 102.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. CTP NV EO
Performance |
| Timeline |
| NMI Holdings |
| CTP NV EO |
NMI Holdings and CTP NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and CTP NV
The main advantage of trading using opposite NMI Holdings and CTP NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, CTP NV 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 CTP NV will offset losses from the drop in CTP NV's long position.| NMI Holdings vs. Taylor Morrison Home | NMI Holdings vs. ATRYS HEALTH SA | NMI Holdings vs. National Health Investors | NMI Holdings vs. Bumrungrad Hospital Public |
| CTP NV vs. AEGEAN AIRLINES | CTP NV vs. Warner Music Group | CTP NV vs. TROPHY GAMES DEV | CTP NV vs. GEAR4MUSIC LS 10 |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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