Correlation Between NMI Holdings and Dno ASA
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Dno ASA 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 Dno ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Dno ASA, you can compare the effects of market volatilities on NMI Holdings and Dno ASA 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 Dno ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Dno ASA.
Diversification Opportunities for NMI Holdings and Dno ASA
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Dno is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA 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 Dno ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dno ASA has no effect on the direction of NMI Holdings i.e., NMI Holdings and Dno ASA go up and down completely randomly.
Pair Corralation between NMI Holdings and Dno ASA
Assuming the 90 days horizon NMI Holdings is expected to generate 1.13 times more return on investment than Dno ASA. However, NMI Holdings is 1.13 times more volatile than Dno ASA. It trades about 0.13 of its potential returns per unit of risk. Dno ASA is currently generating about 0.07 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Dno ASA
Performance |
| Timeline |
| NMI Holdings |
| Dno ASA |
NMI Holdings and Dno ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Dno ASA
The main advantage of trading using opposite NMI Holdings and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Dno ASA 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 Dno ASA will offset losses from the drop in Dno ASA'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 |
| Dno ASA vs. Plastic Omnium | Dno ASA vs. Rayonier Advanced Materials | Dno ASA vs. GOODYEAR T RUBBER | Dno ASA vs. KIMBALL ELECTRONICS |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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