Correlation Between NMI Holdings and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and USWE SPORTS 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 USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and USWE SPORTS AB, you can compare the effects of market volatilities on NMI Holdings and USWE SPORTS 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 USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and USWE SPORTS.
Diversification Opportunities for NMI Holdings and USWE SPORTS
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NMI and USWE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of NMI Holdings i.e., NMI Holdings and USWE SPORTS go up and down completely randomly.
Pair Corralation between NMI Holdings and USWE SPORTS
Assuming the 90 days horizon NMI Holdings is expected to under-perform the USWE SPORTS. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.72 times less risky than USWE SPORTS. The stock trades about -0.23 of its potential returns per unit of risk. The USWE SPORTS AB is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 85.00 in USWE SPORTS AB on November 27, 2024 and sell it today you would lose (4.00) from holding USWE SPORTS AB or give up 4.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. USWE SPORTS AB
Performance |
| Timeline |
| NMI Holdings |
| USWE SPORTS AB |
NMI Holdings and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and USWE SPORTS
The main advantage of trading using opposite NMI Holdings and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| NMI Holdings vs. China Southern Airlines | NMI Holdings vs. Gol Intelligent Airlines | NMI Holdings vs. International Consolidated Airlines | NMI Holdings vs. CARSALESCOM |
| USWE SPORTS vs. SmarTone Telecommunications Holdings | USWE SPORTS vs. 24SEVENOFFICE GROUP AB | USWE SPORTS vs. Hisense Home Appliances | USWE SPORTS vs. Ultra Clean 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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