Correlation Between NMI Holdings and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Bunzl Plc 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 Bunzl Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Bunzl plc, you can compare the effects of market volatilities on NMI Holdings and Bunzl Plc 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 Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Bunzl Plc.
Diversification Opportunities for NMI Holdings and Bunzl Plc
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Bunzl is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc 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 Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of NMI Holdings i.e., NMI Holdings and Bunzl Plc go up and down completely randomly.
Pair Corralation between NMI Holdings and Bunzl Plc
Assuming the 90 days horizon NMI Holdings is expected to generate 1.23 times more return on investment than Bunzl Plc. However, NMI Holdings is 1.23 times more volatile than Bunzl plc. It trades about 0.09 of its potential returns per unit of risk. Bunzl plc is currently generating about 0.06 per unit of risk. If you would invest 1,930 in NMI Holdings on September 12, 2024 and sell it today you would earn a total of 1,770 from holding NMI Holdings or generate 91.71% 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. Bunzl plc
Performance |
| Timeline |
| NMI Holdings |
| Bunzl plc |
NMI Holdings and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Bunzl Plc
The main advantage of trading using opposite NMI Holdings and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Bunzl Plc 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| NMI Holdings vs. Nufarm Limited | NMI Holdings vs. AVITA Medical | NMI Holdings vs. Sterling Construction | NMI Holdings vs. Avanos Medical |
| Bunzl Plc vs. PUBLIC STORAGE PRFO | Bunzl Plc vs. Clean Energy Fuels | Bunzl Plc vs. BORR DRILLING NEW | Bunzl Plc vs. PRECISION DRILLING P |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |