Correlation Between NMI Holdings and AMADEUS IT
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and AMADEUS IT 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 AMADEUS IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and AMADEUS IT GRP, you can compare the effects of market volatilities on NMI Holdings and AMADEUS IT 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 AMADEUS IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and AMADEUS IT.
Diversification Opportunities for NMI Holdings and AMADEUS IT
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NMI and AMADEUS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and AMADEUS IT GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMADEUS IT GRP 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 AMADEUS IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMADEUS IT GRP has no effect on the direction of NMI Holdings i.e., NMI Holdings and AMADEUS IT go up and down completely randomly.
Pair Corralation between NMI Holdings and AMADEUS IT
Assuming the 90 days horizon NMI Holdings is expected to generate 1.11 times more return on investment than AMADEUS IT. However, NMI Holdings is 1.11 times more volatile than AMADEUS IT GRP. It trades about 0.1 of its potential returns per unit of risk. AMADEUS IT GRP is currently generating about 0.03 per unit of risk. If you would invest 2,460 in NMI Holdings on August 25, 2024 and sell it today you would earn a total of 1,080 from holding NMI Holdings or generate 43.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. AMADEUS IT GRP
Performance |
| Timeline |
| NMI Holdings |
| AMADEUS IT GRP |
NMI Holdings and AMADEUS IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and AMADEUS IT
The main advantage of trading using opposite NMI Holdings and AMADEUS IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, AMADEUS IT 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 AMADEUS IT will offset losses from the drop in AMADEUS IT's long position.| NMI Holdings vs. Lion One Metals | NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. OFFICE DEPOT | NMI Holdings vs. JAPAN TOBACCO UNSPADR12 |
| AMADEUS IT vs. Accenture plc | AMADEUS IT vs. Cognizant Technology Solutions | AMADEUS IT vs. Superior Plus Corp | AMADEUS IT 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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