Correlation Between NMI Holdings and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Eagle Materials 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 Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Eagle Materials, you can compare the effects of market volatilities on NMI Holdings and Eagle Materials 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 Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Eagle Materials.
Diversification Opportunities for NMI Holdings and Eagle Materials
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and Eagle is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials 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 Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of NMI Holdings i.e., NMI Holdings and Eagle Materials go up and down completely randomly.
Pair Corralation between NMI Holdings and Eagle Materials
Assuming the 90 days horizon NMI Holdings is expected to generate 5.31 times less return on investment than Eagle Materials. In addition to that, NMI Holdings is 1.1 times more volatile than Eagle Materials. It trades about 0.04 of its total potential returns per unit of risk. Eagle Materials is currently generating about 0.26 per unit of volatility. If you would invest 26,600 in Eagle Materials on August 29, 2024 and sell it today you would earn a total of 3,200 from holding Eagle Materials or generate 12.03% 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. Eagle Materials
Performance |
| Timeline |
| NMI Holdings |
| Eagle Materials |
NMI Holdings and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Eagle Materials
The main advantage of trading using opposite NMI Holdings and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Eagle Materials 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
| Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings | Eagle Materials vs. Origin Agritech | Eagle Materials vs. SIVERS SEMICONDUCTORS AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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