Correlation Between NMI Holdings and Ceres Power
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Ceres Power 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 Ceres Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Ceres Power Holdings, you can compare the effects of market volatilities on NMI Holdings and Ceres Power 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 Ceres Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Ceres Power.
Diversification Opportunities for NMI Holdings and Ceres Power
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NMI and Ceres is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Ceres Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceres Power Holdings 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 Ceres Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceres Power Holdings has no effect on the direction of NMI Holdings i.e., NMI Holdings and Ceres Power go up and down completely randomly.
Pair Corralation between NMI Holdings and Ceres Power
Assuming the 90 days horizon NMI Holdings is expected to under-perform the Ceres Power. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 2.6 times less risky than Ceres Power. The stock trades about -0.13 of its potential returns per unit of risk. The Ceres Power Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 195.00 in Ceres Power Holdings on October 10, 2024 and sell it today you would earn a total of 17.00 from holding Ceres Power Holdings or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Ceres Power Holdings
Performance |
| Timeline |
| NMI Holdings |
| Ceres Power Holdings |
NMI Holdings and Ceres Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Ceres Power
The main advantage of trading using opposite NMI Holdings and Ceres Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Ceres Power 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 Ceres Power will offset losses from the drop in Ceres Power's long position.| NMI Holdings vs. Austevoll Seafood ASA | NMI Holdings vs. alstria office REIT AG | NMI Holdings vs. United Natural Foods | NMI Holdings vs. CITY OFFICE REIT |
| Ceres Power vs. The Trade Desk | Ceres Power vs. Entravision Communications | Ceres Power vs. Fast Retailing Co | Ceres Power vs. MARKET VECTR RETAIL |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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