Correlation Between NMI Holdings and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Liberty Broadband 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 Liberty Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Liberty Broadband, you can compare the effects of market volatilities on NMI Holdings and Liberty Broadband 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 Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Liberty Broadband.
Diversification Opportunities for NMI Holdings and Liberty Broadband
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Liberty is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband 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 Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband has no effect on the direction of NMI Holdings i.e., NMI Holdings and Liberty Broadband go up and down completely randomly.
Pair Corralation between NMI Holdings and Liberty Broadband
Assuming the 90 days horizon NMI Holdings is expected to generate 0.66 times more return on investment than Liberty Broadband. However, NMI Holdings is 1.53 times less risky than Liberty Broadband. It trades about 0.1 of its potential returns per unit of risk. Liberty Broadband is currently generating about 0.01 per unit of risk. If you would invest 1,860 in NMI Holdings on September 1, 2024 and sell it today you would earn a total of 1,920 from holding NMI Holdings or generate 103.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Liberty Broadband
Performance |
| Timeline |
| NMI Holdings |
| Liberty Broadband |
NMI Holdings and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Liberty Broadband
The main advantage of trading using opposite NMI Holdings and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband's long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| Liberty Broadband vs. Superior Plus Corp | Liberty Broadband vs. NMI Holdings | Liberty Broadband vs. Origin Agritech | Liberty Broadband 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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