Correlation Between NMI Holdings and Evotec SE
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Evotec SE 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 Evotec SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Evotec SE, you can compare the effects of market volatilities on NMI Holdings and Evotec SE 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 Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Evotec SE.
Diversification Opportunities for NMI Holdings and Evotec SE
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Evotec is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Evotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE 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 Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE has no effect on the direction of NMI Holdings i.e., NMI Holdings and Evotec SE go up and down completely randomly.
Pair Corralation between NMI Holdings and Evotec SE
Assuming the 90 days horizon NMI Holdings is expected to generate 0.29 times more return on investment than Evotec SE. However, NMI Holdings is 3.44 times less risky than Evotec SE. It trades about 0.11 of its potential returns per unit of risk. Evotec SE is currently generating about -0.03 per unit of risk. If you would invest 2,600 in NMI Holdings on September 4, 2024 and sell it today you would earn a total of 1,160 from holding NMI Holdings or generate 44.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
NMI Holdings vs. Evotec SE
Performance |
| Timeline |
| NMI Holdings |
| Evotec SE |
NMI Holdings and Evotec SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Evotec SE
The main advantage of trading using opposite NMI Holdings and Evotec SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Evotec SE 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 Evotec SE will offset losses from the drop in Evotec SE's long position.| NMI Holdings vs. HYDROFARM HLD GRP | NMI Holdings vs. VIAPLAY GROUP AB | NMI Holdings vs. Titan Machinery | NMI Holdings vs. SCANSOURCE |
| Evotec SE vs. Merck KGaA | Evotec SE vs. Superior Plus Corp | Evotec SE vs. NMI Holdings | Evotec SE 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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