Correlation Between NMI Holdings and Equitable Holdings
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Equitable Holdings 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 Equitable Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Equitable Holdings, you can compare the effects of market volatilities on NMI Holdings and Equitable Holdings 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 Equitable Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Equitable Holdings.
Diversification Opportunities for NMI Holdings and Equitable Holdings
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Equitable is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings 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 Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of NMI Holdings i.e., NMI Holdings and Equitable Holdings go up and down completely randomly.
Pair Corralation between NMI Holdings and Equitable Holdings
Assuming the 90 days horizon NMI Holdings is expected to generate 1.33 times less return on investment than Equitable Holdings. But when comparing it to its historical volatility, NMI Holdings is 1.25 times less risky than Equitable Holdings. It trades about 0.11 of its potential returns per unit of risk. Equitable Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,158 in Equitable Holdings on September 1, 2024 and sell it today you would earn a total of 322.00 from holding Equitable Holdings or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NMI Holdings vs. Equitable Holdings
Performance |
| Timeline |
| NMI Holdings |
| Equitable Holdings |
NMI Holdings and Equitable Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Equitable Holdings
The main advantage of trading using opposite NMI Holdings and Equitable Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Equitable Holdings 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 Equitable Holdings will offset losses from the drop in Equitable Holdings' long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| Equitable Holdings vs. NN Group NV | Equitable Holdings vs. Superior Plus Corp | Equitable Holdings vs. Origin Agritech | Equitable Holdings vs. Identiv |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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