Correlation Between NMI Holdings and Boiron SA
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Boiron SA 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 Boiron SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Boiron SA, you can compare the effects of market volatilities on NMI Holdings and Boiron SA 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 Boiron SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Boiron SA.
Diversification Opportunities for NMI Holdings and Boiron SA
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Boiron is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA 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 Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of NMI Holdings i.e., NMI Holdings and Boiron SA go up and down completely randomly.
Pair Corralation between NMI Holdings and Boiron SA
Assuming the 90 days horizon NMI Holdings is expected to generate 1.05 times more return on investment than Boiron SA. However, NMI Holdings is 1.05 times more volatile than Boiron SA. It trades about 0.13 of its potential returns per unit of risk. Boiron SA is currently generating about -0.28 per unit of risk. If you would invest 3,540 in NMI Holdings on September 2, 2024 and sell it today you would earn a total of 220.00 from holding NMI Holdings or generate 6.21% 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. Boiron SA
Performance |
| Timeline |
| NMI Holdings |
| Boiron SA |
NMI Holdings and Boiron SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Boiron SA
The main advantage of trading using opposite NMI Holdings and Boiron SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Boiron SA 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 Boiron SA will offset losses from the drop in Boiron SA's long position.| NMI Holdings vs. Taylor Morrison Home | NMI Holdings vs. ATRYS HEALTH SA | NMI Holdings vs. National Health Investors | NMI Holdings vs. Bumrungrad Hospital Public |
| Boiron SA vs. AbbVie Inc | Boiron SA vs. Pfizer Inc | Boiron SA vs. Superior Plus Corp | Boiron SA 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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