Correlation Between NMI Holdings and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Canadian Utilities 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 Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Canadian Utilities Limited, you can compare the effects of market volatilities on NMI Holdings and Canadian Utilities 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 Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Canadian Utilities.
Diversification Opportunities for NMI Holdings and Canadian Utilities
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMI and Canadian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of NMI Holdings i.e., NMI Holdings and Canadian Utilities go up and down completely randomly.
Pair Corralation between NMI Holdings and Canadian Utilities
Assuming the 90 days horizon NMI Holdings is expected to generate 1.19 times more return on investment than Canadian Utilities. However, NMI Holdings is 1.19 times more volatile than Canadian Utilities Limited. It trades about 0.09 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.04 per unit of risk. If you would invest 2,400 in NMI Holdings on August 28, 2024 and sell it today you would earn a total of 1,240 from holding NMI Holdings or generate 51.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Canadian Utilities Limited
Performance |
| Timeline |
| NMI Holdings |
| Canadian Utilities |
NMI Holdings and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Canadian Utilities
The main advantage of trading using opposite NMI Holdings and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
| Canadian Utilities vs. CONAGRA FOODS | Canadian Utilities vs. PT Indofood Sukses | Canadian Utilities vs. Performance Food Group | Canadian Utilities vs. THRACE PLASTICS |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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