Correlation Between NMI Holdings and Air Liquide
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Air Liquide 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 Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Air Liquide SA, you can compare the effects of market volatilities on NMI Holdings and Air Liquide 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 Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Air Liquide.
Diversification Opportunities for NMI Holdings and Air Liquide
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Air is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA 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 Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of NMI Holdings i.e., NMI Holdings and Air Liquide go up and down completely randomly.
Pair Corralation between NMI Holdings and Air Liquide
Assuming the 90 days horizon NMI Holdings is expected to generate 1.4 times more return on investment than Air Liquide. However, NMI Holdings is 1.4 times more volatile than Air Liquide SA. It trades about 0.1 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.03 per unit of risk. If you would invest 2,900 in NMI Holdings on August 28, 2024 and sell it today you would earn a total of 740.00 from holding NMI Holdings or generate 25.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Air Liquide SA
Performance |
| Timeline |
| NMI Holdings |
| Air Liquide SA |
NMI Holdings and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Air Liquide
The main advantage of trading using opposite NMI Holdings and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
| Air Liquide vs. Superior Plus Corp | Air Liquide vs. NMI Holdings | Air Liquide vs. Origin Agritech | Air Liquide 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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