Correlation Between NMI Holdings and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and BBVA Banco 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 BBVA Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and BBVA Banco Frances, you can compare the effects of market volatilities on NMI Holdings and BBVA Banco 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 BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and BBVA Banco.
Diversification Opportunities for NMI Holdings and BBVA Banco
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and BBVA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and BBVA Banco Frances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Banco Frances 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 BBVA Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Banco Frances has no effect on the direction of NMI Holdings i.e., NMI Holdings and BBVA Banco go up and down completely randomly.
Pair Corralation between NMI Holdings and BBVA Banco
Assuming the 90 days horizon NMI Holdings is expected to under-perform the BBVA Banco. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 2.21 times less risky than BBVA Banco. The stock trades about -0.05 of its potential returns per unit of risk. The BBVA Banco Frances is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,010 in BBVA Banco Frances on August 25, 2024 and sell it today you would earn a total of 490.00 from holding BBVA Banco Frances or generate 48.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. BBVA Banco Frances
Performance |
| Timeline |
| NMI Holdings |
| BBVA Banco Frances |
NMI Holdings and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and BBVA Banco
The main advantage of trading using opposite NMI Holdings and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, BBVA Banco 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 BBVA Banco will offset losses from the drop in BBVA Banco's long position.| NMI Holdings vs. Lion One Metals | NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. OFFICE DEPOT | NMI Holdings vs. JAPAN TOBACCO UNSPADR12 |
| BBVA Banco vs. Postal Savings Bank | BBVA Banco vs. Deutsche Bank Aktiengesellschaft | BBVA Banco vs. Superior Plus Corp | BBVA Banco vs. NMI 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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