Correlation Between NMI Holdings and Columbia Sportswear
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Columbia Sportswear 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 Columbia Sportswear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Columbia Sportswear, you can compare the effects of market volatilities on NMI Holdings and Columbia Sportswear 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 Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Columbia Sportswear.
Diversification Opportunities for NMI Holdings and Columbia Sportswear
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMI and Columbia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear 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 Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of NMI Holdings i.e., NMI Holdings and Columbia Sportswear go up and down completely randomly.
Pair Corralation between NMI Holdings and Columbia Sportswear
Assuming the 90 days horizon NMI Holdings is expected to under-perform the Columbia Sportswear. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.92 times less risky than Columbia Sportswear. The stock trades about -0.28 of its potential returns per unit of risk. The Columbia Sportswear is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,550 in Columbia Sportswear on November 29, 2024 and sell it today you would earn a total of 200.00 from holding Columbia Sportswear or generate 2.34% 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. Columbia Sportswear
Performance |
| Timeline |
| NMI Holdings |
| Columbia Sportswear |
NMI Holdings and Columbia Sportswear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Columbia Sportswear
The main advantage of trading using opposite NMI Holdings and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Columbia Sportswear 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 Columbia Sportswear will offset losses from the drop in Columbia Sportswear's long position.| NMI Holdings vs. CanSino Biologics | NMI Holdings vs. MOLSON RS BEVERAGE | NMI Holdings vs. Vulcan Materials | NMI Holdings vs. China Resources Beer |
| Columbia Sportswear vs. Kingdee International Software | Columbia Sportswear vs. Check Point Software | Columbia Sportswear vs. ASURE SOFTWARE | Columbia Sportswear vs. United Breweries Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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