Correlation Between NMI Holdings and Fuji Media
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Fuji Media 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 Fuji Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Fuji Media Holdings, you can compare the effects of market volatilities on NMI Holdings and Fuji Media 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 Fuji Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Fuji Media.
Diversification Opportunities for NMI Holdings and Fuji Media
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and Fuji is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Fuji Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Media Holdings 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 Fuji Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Media Holdings has no effect on the direction of NMI Holdings i.e., NMI Holdings and Fuji Media go up and down completely randomly.
Pair Corralation between NMI Holdings and Fuji Media
Assuming the 90 days horizon NMI Holdings is expected to generate 1.4 times more return on investment than Fuji Media. However, NMI Holdings is 1.4 times more volatile than Fuji Media Holdings. It trades about 0.13 of its potential returns per unit of risk. Fuji Media Holdings is currently generating about 0.06 per unit of risk. If you would invest 3,580 in NMI Holdings on August 31, 2024 and sell it today you would earn a total of 220.00 from holding NMI Holdings or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Fuji Media Holdings
Performance |
| Timeline |
| NMI Holdings |
| Fuji Media Holdings |
NMI Holdings and Fuji Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Fuji Media
The main advantage of trading using opposite NMI Holdings and Fuji Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Fuji Media 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 Fuji Media will offset losses from the drop in Fuji Media's long position.| NMI Holdings vs. Iridium Communications | NMI Holdings vs. BOS BETTER ONLINE | NMI Holdings vs. Verizon Communications | NMI Holdings vs. Singapore Telecommunications Limited |
| Fuji Media vs. ARISTOCRAT LEISURE | Fuji Media vs. ePlay Digital | Fuji Media vs. United Airlines Holdings | Fuji Media vs. Singapore Airlines Limited |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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