Correlation Between NMI Holdings and Auckland International
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Auckland International 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 Auckland International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Auckland International Airport, you can compare the effects of market volatilities on NMI Holdings and Auckland International 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 Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Auckland International.
Diversification Opportunities for NMI Holdings and Auckland International
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and Auckland is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International 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 Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of NMI Holdings i.e., NMI Holdings and Auckland International go up and down completely randomly.
Pair Corralation between NMI Holdings and Auckland International
Assuming the 90 days horizon NMI Holdings is expected to generate 1.21 times more return on investment than Auckland International. However, NMI Holdings is 1.21 times more volatile than Auckland International Airport. It trades about 0.09 of its potential returns per unit of risk. Auckland International Airport is currently generating about -0.02 per unit of risk. If you would invest 1,900 in NMI Holdings on September 3, 2024 and sell it today you would earn a total of 1,860 from holding NMI Holdings or generate 97.89% 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. Auckland International Airport
Performance |
| Timeline |
| NMI Holdings |
| Auckland International |
NMI Holdings and Auckland International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Auckland International
The main advantage of trading using opposite NMI Holdings and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Auckland International 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 Auckland International will offset losses from the drop in Auckland International's long position.| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
| Auckland International vs. GFL ENVIRONM | Auckland International vs. CVS Health | Auckland International vs. NIPPON STEEL SPADR | Auckland International vs. Nippon Steel |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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