Correlation Between NMI Holdings and Deckers Outdoor
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Deckers Outdoor 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 Deckers Outdoor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Deckers Outdoor, you can compare the effects of market volatilities on NMI Holdings and Deckers Outdoor 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 Deckers Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Deckers Outdoor.
Diversification Opportunities for NMI Holdings and Deckers Outdoor
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and Deckers is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Deckers Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deckers Outdoor 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 Deckers Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deckers Outdoor has no effect on the direction of NMI Holdings i.e., NMI Holdings and Deckers Outdoor go up and down completely randomly.
Pair Corralation between NMI Holdings and Deckers Outdoor
Assuming the 90 days horizon NMI Holdings is expected to generate 2.07 times less return on investment than Deckers Outdoor. But when comparing it to its historical volatility, NMI Holdings is 1.23 times less risky than Deckers Outdoor. It trades about 0.27 of its potential returns per unit of risk. Deckers Outdoor is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 14,630 in Deckers Outdoor on September 4, 2024 and sell it today you would earn a total of 3,870 from holding Deckers Outdoor or generate 26.45% 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. Deckers Outdoor
Performance |
| Timeline |
| NMI Holdings |
| Deckers Outdoor |
NMI Holdings and Deckers Outdoor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Deckers Outdoor
The main advantage of trading using opposite NMI Holdings and Deckers Outdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Deckers Outdoor 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 Deckers Outdoor will offset losses from the drop in Deckers Outdoor's long position.| NMI Holdings vs. HYDROFARM HLD GRP | NMI Holdings vs. VIAPLAY GROUP AB | NMI Holdings vs. Titan Machinery | NMI Holdings vs. SCANSOURCE |
| Deckers Outdoor vs. PUMA SE | Deckers Outdoor vs. Superior Plus Corp | Deckers Outdoor vs. NMI Holdings | Deckers Outdoor 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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