Correlation Between NMI Holdings and DICKS Sporting
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and DICKS Sporting 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 DICKS Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and DICKS Sporting Goods, you can compare the effects of market volatilities on NMI Holdings and DICKS Sporting 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 DICKS Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and DICKS Sporting.
Diversification Opportunities for NMI Holdings and DICKS Sporting
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMI and DICKS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and DICKS Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods 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 DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods has no effect on the direction of NMI Holdings i.e., NMI Holdings and DICKS Sporting go up and down completely randomly.
Pair Corralation between NMI Holdings and DICKS Sporting
Assuming the 90 days horizon NMI Holdings is expected to generate 2.85 times less return on investment than DICKS Sporting. But when comparing it to its historical volatility, NMI Holdings is 1.38 times less risky than DICKS Sporting. It trades about 0.06 of its potential returns per unit of risk. DICKS Sporting Goods is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 18,546 in DICKS Sporting Goods on August 30, 2024 and sell it today you would earn a total of 2,304 from holding DICKS Sporting Goods or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
NMI Holdings vs. DICKS Sporting Goods
Performance |
| Timeline |
| NMI Holdings |
| DICKS Sporting Goods |
NMI Holdings and DICKS Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and DICKS Sporting
The main advantage of trading using opposite NMI Holdings and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, DICKS Sporting 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 DICKS Sporting will offset losses from the drop in DICKS Sporting's long position.| NMI Holdings vs. Perseus Mining Limited | NMI Holdings vs. CVW CLEANTECH INC | NMI Holdings vs. Warner Music Group | NMI Holdings vs. Tencent Music Entertainment |
| DICKS Sporting vs. Superior Plus Corp | DICKS Sporting vs. NMI Holdings | DICKS Sporting vs. SIVERS SEMICONDUCTORS AB | DICKS Sporting vs. Talanx AG |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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