Correlation Between NMI Holdings and Coca Cola
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Coca Cola 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 Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on NMI Holdings and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Coca Cola.
Diversification Opportunities for NMI Holdings and Coca Cola
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Coca is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola FEMSA has no effect on the direction of NMI Holdings i.e., NMI Holdings and Coca Cola go up and down completely randomly.
Pair Corralation between NMI Holdings and Coca Cola
Assuming the 90 days horizon NMI Holdings is expected to generate 0.84 times more return on investment than Coca Cola. However, NMI Holdings is 1.19 times less risky than Coca Cola. It trades about 0.13 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about -0.02 per unit of risk. If you would invest 3,540 in NMI Holdings on September 2, 2024 and sell it today you would earn a total of 220.00 from holding NMI Holdings or generate 6.21% 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. Coca Cola FEMSA SAB
Performance |
| Timeline |
| NMI Holdings |
| Coca Cola FEMSA |
NMI Holdings and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Coca Cola
The main advantage of trading using opposite NMI Holdings and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| NMI Holdings vs. Taylor Morrison Home | NMI Holdings vs. ATRYS HEALTH SA | NMI Holdings vs. National Health Investors | NMI Holdings vs. Bumrungrad Hospital Public |
| Coca Cola vs. Charter Communications | Coca Cola vs. International Consolidated Airlines | Coca Cola vs. Entravision Communications | Coca Cola vs. Computershare Limited |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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