Correlation Between NMI Holdings and EBay
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and EBay 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 EBay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and eBay Inc, you can compare the effects of market volatilities on NMI Holdings and EBay 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 EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and EBay.
Diversification Opportunities for NMI Holdings and EBay
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and EBay is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of NMI Holdings i.e., NMI Holdings and EBay go up and down completely randomly.
Pair Corralation between NMI Holdings and EBay
Assuming the 90 days horizon NMI Holdings is expected to generate 1.24 times less return on investment than EBay. But when comparing it to its historical volatility, NMI Holdings is 1.03 times less risky than EBay. It trades about 0.11 of its potential returns per unit of risk. eBay Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,751 in eBay Inc on August 28, 2024 and sell it today you would earn a total of 1,470 from holding eBay Inc or generate 30.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
NMI Holdings vs. eBay Inc
Performance |
| Timeline |
| NMI Holdings |
| eBay Inc |
NMI Holdings and EBay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and EBay
The main advantage of trading using opposite NMI Holdings and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's 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 |
| EBay vs. Superior Plus Corp | EBay vs. NMI Holdings | EBay vs. Origin Agritech | EBay 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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