Correlation Between NMI Holdings and Walker Dunlop
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Walker Dunlop 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 Walker Dunlop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Walker Dunlop, you can compare the effects of market volatilities on NMI Holdings and Walker Dunlop 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 Walker Dunlop. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Walker Dunlop.
Diversification Opportunities for NMI Holdings and Walker Dunlop
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Walker is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop 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 Walker Dunlop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walker Dunlop has no effect on the direction of NMI Holdings i.e., NMI Holdings and Walker Dunlop go up and down completely randomly.
Pair Corralation between NMI Holdings and Walker Dunlop
Assuming the 90 days horizon NMI Holdings is expected to generate 0.82 times more return on investment than Walker Dunlop. However, NMI Holdings is 1.22 times less risky than Walker Dunlop. It trades about -0.16 of its potential returns per unit of risk. Walker Dunlop is currently generating about -0.4 per unit of risk. If you would invest 3,620 in NMI Holdings on October 14, 2024 and sell it today you would lose (160.00) from holding NMI Holdings or give up 4.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Walker Dunlop
Performance |
| Timeline |
| NMI Holdings |
| Walker Dunlop |
NMI Holdings and Walker Dunlop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Walker Dunlop
The main advantage of trading using opposite NMI Holdings and Walker Dunlop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Walker Dunlop 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 Walker Dunlop will offset losses from the drop in Walker Dunlop's long position.| NMI Holdings vs. PDS Biotechnology Corp | NMI Holdings vs. ANTA SPORTS PRODUCT | NMI Holdings vs. SOEDER SPORTFISKE AB | NMI Holdings vs. Platinum Investment Management |
| Walker Dunlop vs. DIVERSIFIED ROYALTY | Walker Dunlop vs. Federal Home Loan | Walker Dunlop vs. Superior Plus Corp | Walker Dunlop vs. NMI Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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