Correlation Between NMI Holdings and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and FuelCell Energy 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 FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and FuelCell Energy, you can compare the effects of market volatilities on NMI Holdings and FuelCell Energy 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and FuelCell Energy.
Diversification Opportunities for NMI Holdings and FuelCell Energy
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and FuelCell is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of NMI Holdings i.e., NMI Holdings and FuelCell Energy go up and down completely randomly.
Pair Corralation between NMI Holdings and FuelCell Energy
Assuming the 90 days horizon NMI Holdings is expected to under-perform the FuelCell Energy. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 5.44 times less risky than FuelCell Energy. The stock trades about -0.12 of its potential returns per unit of risk. The FuelCell Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,065 in FuelCell Energy on October 11, 2024 and sell it today you would earn a total of 157.00 from holding FuelCell Energy or generate 14.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.89% |
| Values | Daily Returns |
NMI Holdings vs. FuelCell Energy
Performance |
| Timeline |
| NMI Holdings |
| FuelCell Energy |
NMI Holdings and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and FuelCell Energy
The main advantage of trading using opposite NMI Holdings and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| NMI Holdings vs. STMicroelectronics NV | NMI Holdings vs. Shenzhen Investment Limited | NMI Holdings vs. ECHO INVESTMENT ZY | NMI Holdings vs. ARROW ELECTRONICS |
| FuelCell Energy vs. Delta Electronics Public | FuelCell Energy vs. Superior Plus Corp | FuelCell Energy vs. NMI Holdings | FuelCell Energy 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |