Correlation Between NMI Holdings and DevEx Resources
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and DevEx Resources 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 DevEx Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and DevEx Resources Limited, you can compare the effects of market volatilities on NMI Holdings and DevEx Resources 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 DevEx Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and DevEx Resources.
Diversification Opportunities for NMI Holdings and DevEx Resources
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and DevEx is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and DevEx Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DevEx Resources 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 DevEx Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DevEx Resources has no effect on the direction of NMI Holdings i.e., NMI Holdings and DevEx Resources go up and down completely randomly.
Pair Corralation between NMI Holdings and DevEx Resources
Assuming the 90 days horizon NMI Holdings is expected to generate 1.53 times less return on investment than DevEx Resources. But when comparing it to its historical volatility, NMI Holdings is 6.93 times less risky than DevEx Resources. It trades about 0.09 of its potential returns per unit of risk. DevEx Resources Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 20.00 in DevEx Resources Limited on September 1, 2024 and sell it today you would lose (13.50) from holding DevEx Resources Limited or give up 67.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. DevEx Resources Limited
Performance |
| Timeline |
| NMI Holdings |
| DevEx Resources |
NMI Holdings and DevEx Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and DevEx Resources
The main advantage of trading using opposite NMI Holdings and DevEx Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, DevEx Resources 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 DevEx Resources will offset losses from the drop in DevEx Resources' long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| DevEx Resources vs. Rio Tinto Group | DevEx Resources vs. Liontown Resources Limited | DevEx Resources vs. American Lithium Corp |
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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