Correlation Between NMI Holdings and Fresenius
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Fresenius 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 Fresenius into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Fresenius SE Co, you can compare the effects of market volatilities on NMI Holdings and Fresenius 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 Fresenius. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Fresenius.
Diversification Opportunities for NMI Holdings and Fresenius
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and Fresenius is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius 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 Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of NMI Holdings i.e., NMI Holdings and Fresenius go up and down completely randomly.
Pair Corralation between NMI Holdings and Fresenius
Assuming the 90 days horizon NMI Holdings is expected to generate 1.45 times more return on investment than Fresenius. However, NMI Holdings is 1.45 times more volatile than Fresenius SE Co. It trades about 0.27 of its potential returns per unit of risk. Fresenius SE Co is currently generating about 0.03 per unit of risk. If you would invest 3,360 in NMI Holdings on September 3, 2024 and sell it today you would earn a total of 400.00 from holding NMI Holdings or generate 11.9% 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. Fresenius SE Co
Performance |
| Timeline |
| NMI Holdings |
| Fresenius SE |
NMI Holdings and Fresenius Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Fresenius
The main advantage of trading using opposite NMI Holdings and Fresenius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Fresenius 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 Fresenius will offset losses from the drop in Fresenius' long position.| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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