Correlation Between NMI Holdings and Axfood AB
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Axfood AB 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 Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Axfood AB, you can compare the effects of market volatilities on NMI Holdings and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Axfood AB.
Diversification Opportunities for NMI Holdings and Axfood AB
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and Axfood is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of NMI Holdings i.e., NMI Holdings and Axfood AB go up and down completely randomly.
Pair Corralation between NMI Holdings and Axfood AB
Assuming the 90 days horizon NMI Holdings is expected to generate 2.91 times less return on investment than Axfood AB. But when comparing it to its historical volatility, NMI Holdings is 1.14 times less risky than Axfood AB. It trades about 0.05 of its potential returns per unit of risk. Axfood AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,975 in Axfood AB on October 25, 2024 and sell it today you would earn a total of 74.00 from holding Axfood AB or generate 3.75% 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. Axfood AB
Performance |
| Timeline |
| NMI Holdings |
| Axfood AB |
NMI Holdings and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Axfood AB
The main advantage of trading using opposite NMI Holdings and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| NMI Holdings vs. FAST RETAIL ADR | NMI Holdings vs. FIRST SAVINGS FINL | NMI Holdings vs. MGIC INVESTMENT | NMI Holdings vs. Ross Stores |
| Axfood AB vs. Synovus Financial Corp | Axfood AB vs. Air Lease | Axfood AB vs. United Rentals | Axfood AB vs. Virtu Financial |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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