Correlation Between NMI Holdings and Amcor Plc
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Amcor 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 Amcor 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 Amcor plc, you can compare the effects of market volatilities on NMI Holdings and Amcor 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 Amcor Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Amcor Plc.
Diversification Opportunities for NMI Holdings and Amcor Plc
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NMI and Amcor is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Amcor plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcor plc 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 Amcor Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcor plc has no effect on the direction of NMI Holdings i.e., NMI Holdings and Amcor Plc go up and down completely randomly.
Pair Corralation between NMI Holdings and Amcor Plc
Assuming the 90 days horizon NMI Holdings is expected to generate 0.58 times more return on investment than Amcor Plc. However, NMI Holdings is 1.72 times less risky than Amcor Plc. It trades about 0.22 of its potential returns per unit of risk. Amcor plc is currently generating about 0.09 per unit of risk. If you would invest 3,460 in NMI Holdings on September 12, 2024 and sell it today you would earn a total of 240.00 from holding NMI Holdings or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Amcor plc
Performance |
| Timeline |
| NMI Holdings |
| Amcor plc |
NMI Holdings and Amcor Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Amcor Plc
The main advantage of trading using opposite NMI Holdings and Amcor Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Amcor 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 Amcor Plc will offset losses from the drop in Amcor Plc's long position.| NMI Holdings vs. Nufarm Limited | NMI Holdings vs. AVITA Medical | NMI Holdings vs. Sterling Construction | NMI Holdings vs. Avanos Medical |
| Amcor Plc vs. Packaging of | Amcor Plc vs. Graphic Packaging Holding | Amcor Plc vs. Superior Plus Corp | Amcor 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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