Correlation Between NMI Holdings and Cadence Design
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Cadence Design 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 Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Cadence Design Systems, you can compare the effects of market volatilities on NMI Holdings and Cadence Design 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 Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Cadence Design.
Diversification Opportunities for NMI Holdings and Cadence Design
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Cadence is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems 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 Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of NMI Holdings i.e., NMI Holdings and Cadence Design go up and down completely randomly.
Pair Corralation between NMI Holdings and Cadence Design
Assuming the 90 days horizon NMI Holdings is expected to generate 0.77 times more return on investment than Cadence Design. However, NMI Holdings is 1.29 times less risky than Cadence Design. It trades about 0.09 of its potential returns per unit of risk. Cadence Design Systems is currently generating about 0.06 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. Cadence Design Systems
Performance |
| Timeline |
| NMI Holdings |
| Cadence Design Systems |
NMI Holdings and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Cadence Design
The main advantage of trading using opposite NMI Holdings and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Cadence Design 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 Cadence Design will offset losses from the drop in Cadence Design's long position.| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
| Cadence Design vs. Superior Plus Corp | Cadence Design vs. NMI Holdings | Cadence Design vs. Origin Agritech | Cadence Design vs. SIVERS SEMICONDUCTORS AB |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |