Correlation Between NMI Holdings and Superior Plus
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Superior Plus 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 Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Superior Plus Corp, you can compare the effects of market volatilities on NMI Holdings and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Superior Plus.
Diversification Opportunities for NMI Holdings and Superior Plus
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMI and Superior is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp 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 Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of NMI Holdings i.e., NMI Holdings and Superior Plus go up and down completely randomly.
Pair Corralation between NMI Holdings and Superior Plus
Assuming the 90 days horizon NMI Holdings is expected to under-perform the Superior Plus. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.09 times less risky than Superior Plus. The stock trades about -0.22 of its potential returns per unit of risk. The Superior Plus Corp is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 418.00 in Superior Plus Corp on November 18, 2024 and sell it today you would lose (18.00) from holding Superior Plus Corp or give up 4.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Superior Plus Corp
Performance |
| Timeline |
| NMI Holdings |
| Superior Plus Corp |
NMI Holdings and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Superior Plus
The main advantage of trading using opposite NMI Holdings and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| NMI Holdings vs. SCOTT TECHNOLOGY | NMI Holdings vs. Micron Technology | NMI Holdings vs. Semiconductor Manufacturing International | NMI Holdings vs. ASURE SOFTWARE |
| Superior Plus vs. SPORTING | Superior Plus vs. Actinogen Medical Limited | Superior Plus vs. Columbia Sportswear | Superior Plus vs. Medical Properties Trust |
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 Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |