Correlation Between NMI Holdings and CENTRICA ADR
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and CENTRICA ADR 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 CENTRICA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and CENTRICA ADR NEW, you can compare the effects of market volatilities on NMI Holdings and CENTRICA ADR 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 CENTRICA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and CENTRICA ADR.
Diversification Opportunities for NMI Holdings and CENTRICA ADR
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and CENTRICA is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and CENTRICA ADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRICA ADR NEW 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 CENTRICA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRICA ADR NEW has no effect on the direction of NMI Holdings i.e., NMI Holdings and CENTRICA ADR go up and down completely randomly.
Pair Corralation between NMI Holdings and CENTRICA ADR
Assuming the 90 days horizon NMI Holdings is expected to generate 1.27 times less return on investment than CENTRICA ADR. In addition to that, NMI Holdings is 1.87 times more volatile than CENTRICA ADR NEW. It trades about 0.11 of its total potential returns per unit of risk. CENTRICA ADR NEW is currently generating about 0.27 per unit of volatility. If you would invest 550.00 in CENTRICA ADR NEW on September 1, 2024 and sell it today you would earn a total of 45.00 from holding CENTRICA ADR NEW or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NMI Holdings vs. CENTRICA ADR NEW
Performance |
| Timeline |
| NMI Holdings |
| CENTRICA ADR NEW |
NMI Holdings and CENTRICA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and CENTRICA ADR
The main advantage of trading using opposite NMI Holdings and CENTRICA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, CENTRICA ADR 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 CENTRICA ADR will offset losses from the drop in CENTRICA ADR's long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| CENTRICA ADR vs. TransAlta | CENTRICA ADR vs. Superior Plus Corp | CENTRICA ADR vs. NMI Holdings | CENTRICA ADR vs. Origin Agritech |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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