Correlation Between NMI Holdings and Dillards
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Dillards 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 Dillards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Dillards, you can compare the effects of market volatilities on NMI Holdings and Dillards 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 Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Dillards.
Diversification Opportunities for NMI Holdings and Dillards
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and Dillards is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards 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 Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of NMI Holdings i.e., NMI Holdings and Dillards go up and down completely randomly.
Pair Corralation between NMI Holdings and Dillards
Assuming the 90 days horizon NMI Holdings is expected to generate 0.63 times more return on investment than Dillards. However, NMI Holdings is 1.59 times less risky than Dillards. It trades about 0.1 of its potential returns per unit of risk. Dillards is currently generating about 0.04 per unit of risk. If you would invest 1,920 in NMI Holdings on September 3, 2024 and sell it today you would earn a total of 1,840 from holding NMI Holdings or generate 95.83% 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. Dillards
Performance |
| Timeline |
| NMI Holdings |
| Dillards |
NMI Holdings and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Dillards
The main advantage of trading using opposite NMI Holdings and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Dillards 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 Dillards will offset losses from the drop in Dillards' long position.| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
| Dillards vs. RYOHIN UNSPADR1 | Dillards vs. Superior Plus Corp | Dillards vs. NMI Holdings | Dillards vs. Origin Agritech |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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