Correlation Between NMI Holdings and Koninklijke Ahold
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Koninklijke Ahold 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 Koninklijke Ahold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Koninklijke Ahold Delhaize, you can compare the effects of market volatilities on NMI Holdings and Koninklijke Ahold 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 Koninklijke Ahold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Koninklijke Ahold.
Diversification Opportunities for NMI Holdings and Koninklijke Ahold
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Koninklijke is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold 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 Koninklijke Ahold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Ahold has no effect on the direction of NMI Holdings i.e., NMI Holdings and Koninklijke Ahold go up and down completely randomly.
Pair Corralation between NMI Holdings and Koninklijke Ahold
Assuming the 90 days horizon NMI Holdings is expected to generate 1.57 times more return on investment than Koninklijke Ahold. However, NMI Holdings is 1.57 times more volatile than Koninklijke Ahold Delhaize. It trades about 0.1 of its potential returns per unit of risk. Koninklijke Ahold Delhaize is currently generating about 0.11 per unit of risk. If you would invest 3,020 in NMI Holdings on August 29, 2024 and sell it today you would earn a total of 660.00 from holding NMI Holdings or generate 21.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Koninklijke Ahold Delhaize
Performance |
| Timeline |
| NMI Holdings |
| Koninklijke Ahold |
NMI Holdings and Koninklijke Ahold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Koninklijke Ahold
The main advantage of trading using opposite NMI Holdings and Koninklijke Ahold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Koninklijke Ahold 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 Koninklijke Ahold will offset losses from the drop in Koninklijke Ahold's long position.| NMI Holdings vs. Boyd Gaming | NMI Holdings vs. SEI INVESTMENTS | NMI Holdings vs. HK Electric Investments | NMI Holdings vs. WisdomTree Investments |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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