Correlation Between NMI Holdings and Fastenal
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Fastenal 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 Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Fastenal Company, you can compare the effects of market volatilities on NMI Holdings and Fastenal 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 Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Fastenal.
Diversification Opportunities for NMI Holdings and Fastenal
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Fastenal is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal 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 Fastenal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastenal has no effect on the direction of NMI Holdings i.e., NMI Holdings and Fastenal go up and down completely randomly.
Pair Corralation between NMI Holdings and Fastenal
Assuming the 90 days horizon NMI Holdings is expected to generate 1.12 times more return on investment than Fastenal. However, NMI Holdings is 1.12 times more volatile than Fastenal Company. It trades about 0.09 of its potential returns per unit of risk. Fastenal Company is currently generating about 0.09 per unit of risk. If you would invest 1,900 in NMI Holdings on September 3, 2024 and sell it today you would earn a total of 1,860 from holding NMI Holdings or generate 97.89% 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. Fastenal Company
Performance |
| Timeline |
| NMI Holdings |
| Fastenal |
NMI Holdings and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Fastenal
The main advantage of trading using opposite NMI Holdings and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Fastenal 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 Fastenal will offset losses from the drop in Fastenal's long position.| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
| Fastenal vs. MIRAMAR HOTEL INV | Fastenal vs. Sunstone Hotel Investors | Fastenal vs. Playa Hotels Resorts | Fastenal vs. 24SEVENOFFICE GROUP 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |