Correlation Between NMI Holdings and Bechtle AG
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Bechtle 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 Bechtle 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 Bechtle AG, you can compare the effects of market volatilities on NMI Holdings and Bechtle 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 Bechtle AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Bechtle AG.
Diversification Opportunities for NMI Holdings and Bechtle AG
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Bechtle is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Bechtle AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bechtle 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 Bechtle AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bechtle AG has no effect on the direction of NMI Holdings i.e., NMI Holdings and Bechtle AG go up and down completely randomly.
Pair Corralation between NMI Holdings and Bechtle AG
Assuming the 90 days horizon NMI Holdings is expected to generate 0.99 times more return on investment than Bechtle AG. However, NMI Holdings is 1.01 times less risky than Bechtle AG. It trades about 0.11 of its potential returns per unit of risk. Bechtle AG is currently generating about -0.17 per unit of risk. If you would invest 2,860 in NMI Holdings on September 3, 2024 and sell it today you would earn a total of 900.00 from holding NMI Holdings or generate 31.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Bechtle AG
Performance |
| Timeline |
| NMI Holdings |
| Bechtle AG |
NMI Holdings and Bechtle AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Bechtle AG
The main advantage of trading using opposite NMI Holdings and Bechtle AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Bechtle 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 Bechtle AG will offset losses from the drop in Bechtle AG's long position.| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
| Bechtle AG vs. Check Point Software | Bechtle AG vs. ATOSS SOFTWARE | Bechtle AG vs. FAST RETAIL ADR | Bechtle AG vs. Ultra Clean Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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