Correlation Between NMI Holdings and Xtrackers ShortDAX
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Xtrackers ShortDAX 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 Xtrackers ShortDAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Xtrackers ShortDAX, you can compare the effects of market volatilities on NMI Holdings and Xtrackers ShortDAX 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 Xtrackers ShortDAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Xtrackers ShortDAX.
Diversification Opportunities for NMI Holdings and Xtrackers ShortDAX
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and Xtrackers is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Xtrackers ShortDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers ShortDAX 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 Xtrackers ShortDAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers ShortDAX has no effect on the direction of NMI Holdings i.e., NMI Holdings and Xtrackers ShortDAX go up and down completely randomly.
Pair Corralation between NMI Holdings and Xtrackers ShortDAX
Assuming the 90 days horizon NMI Holdings is expected to generate 1.01 times more return on investment than Xtrackers ShortDAX. However, NMI Holdings is 1.01 times more volatile than Xtrackers ShortDAX. It trades about 0.1 of its potential returns per unit of risk. Xtrackers ShortDAX is currently generating about -0.05 per unit of risk. If you would invest 1,880 in NMI Holdings on August 31, 2024 and sell it today you would earn a total of 1,900 from holding NMI Holdings or generate 101.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Xtrackers ShortDAX
Performance |
| Timeline |
| NMI Holdings |
| Xtrackers ShortDAX |
NMI Holdings and Xtrackers ShortDAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Xtrackers ShortDAX
The main advantage of trading using opposite NMI Holdings and Xtrackers ShortDAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Xtrackers ShortDAX 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 Xtrackers ShortDAX will offset losses from the drop in Xtrackers ShortDAX's long position.| NMI Holdings vs. Iridium Communications | NMI Holdings vs. BOS BETTER ONLINE | NMI Holdings vs. Verizon Communications | NMI Holdings vs. Singapore Telecommunications Limited |
| Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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