Correlation Between NMI Holdings and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Australian Agricultural 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 Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Australian Agricultural, you can compare the effects of market volatilities on NMI Holdings and Australian Agricultural 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 Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Australian Agricultural.
Diversification Opportunities for NMI Holdings and Australian Agricultural
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and Australian is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural 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 Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of NMI Holdings i.e., NMI Holdings and Australian Agricultural go up and down completely randomly.
Pair Corralation between NMI Holdings and Australian Agricultural
Assuming the 90 days horizon NMI Holdings is expected to generate 0.7 times more return on investment than Australian Agricultural. However, NMI Holdings is 1.42 times less risky than Australian Agricultural. It trades about 0.09 of its potential returns per unit of risk. Australian Agricultural is currently generating about 0.0 per unit of risk. If you would invest 2,400 in NMI Holdings on August 28, 2024 and sell it today you would earn a total of 1,240 from holding NMI Holdings or generate 51.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
NMI Holdings vs. Australian Agricultural
Performance |
| Timeline |
| NMI Holdings |
| Australian Agricultural |
NMI Holdings and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Australian Agricultural
The main advantage of trading using opposite NMI Holdings and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural'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 |
| Australian Agricultural vs. Virtus Investment Partners | Australian Agricultural vs. Gladstone Investment | Australian Agricultural vs. EAT WELL INVESTMENT | Australian Agricultural vs. Seven West Media |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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