Correlation Between NMI Holdings and BB Biotech
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and BB Biotech 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 BB Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and BB Biotech AG, you can compare the effects of market volatilities on NMI Holdings and BB Biotech 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 BB Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and BB Biotech.
Diversification Opportunities for NMI Holdings and BB Biotech
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and BBZA is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and BB Biotech AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Biotech 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 BB Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Biotech AG has no effect on the direction of NMI Holdings i.e., NMI Holdings and BB Biotech go up and down completely randomly.
Pair Corralation between NMI Holdings and BB Biotech
Assuming the 90 days horizon NMI Holdings is expected to generate 0.85 times more return on investment than BB Biotech. However, NMI Holdings is 1.18 times less risky than BB Biotech. It trades about 0.11 of its potential returns per unit of risk. BB Biotech AG is currently generating about 0.02 per unit of risk. If you would invest 2,540 in NMI Holdings on August 29, 2024 and sell it today you would earn a total of 1,140 from holding NMI Holdings or generate 44.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
NMI Holdings vs. BB Biotech AG
Performance |
| Timeline |
| NMI Holdings |
| BB Biotech AG |
NMI Holdings and BB Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and BB Biotech
The main advantage of trading using opposite NMI Holdings and BB Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, BB Biotech 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 BB Biotech will offset losses from the drop in BB Biotech's long position.| NMI Holdings vs. Boyd Gaming | NMI Holdings vs. SEI INVESTMENTS | NMI Holdings vs. HK Electric Investments | NMI Holdings vs. WisdomTree Investments |
| BB Biotech vs. HEALTHCARE REAL A | BB Biotech vs. WILLIS LEASE FIN | BB Biotech vs. EHEALTH | BB Biotech vs. NORDHEALTH AS NK |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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