Correlation Between NMI Holdings and Metro AG
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Metro AG 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 Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Metro AG, you can compare the effects of market volatilities on NMI Holdings and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Metro AG.
Diversification Opportunities for NMI Holdings and Metro AG
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and Metro is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of NMI Holdings i.e., NMI Holdings and Metro AG go up and down completely randomly.
Pair Corralation between NMI Holdings and Metro AG
Assuming the 90 days horizon NMI Holdings is expected to under-perform the Metro AG. In addition to that, NMI Holdings is 1.12 times more volatile than Metro AG. It trades about -0.01 of its total potential returns per unit of risk. Metro AG is currently generating about 0.07 per unit of volatility. If you would invest 500.00 in Metro AG on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Metro AG or generate 2.0% 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. Metro AG
Performance |
| Timeline |
| NMI Holdings |
| Metro AG |
NMI Holdings and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Metro AG
The main advantage of trading using opposite NMI Holdings and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| NMI Holdings vs. JJ SNACK FOODS | NMI Holdings vs. Tradegate AG Wertpapierhandelsbank | NMI Holdings vs. JSC Halyk bank | NMI Holdings vs. VARIOUS EATERIES LS |
| Metro AG vs. Lamar Advertising | Metro AG vs. YATRA ONLINE DL 0001 | Metro AG vs. MUTUIONLINE | Metro AG vs. Salesforce |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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