Correlation Between NMI Holdings and Flowers Foods
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Flowers Foods 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 Flowers Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Flowers Foods, you can compare the effects of market volatilities on NMI Holdings and Flowers Foods 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 Flowers Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Flowers Foods.
Diversification Opportunities for NMI Holdings and Flowers Foods
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NMI and Flowers is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Flowers Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowers Foods 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 Flowers Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowers Foods has no effect on the direction of NMI Holdings i.e., NMI Holdings and Flowers Foods go up and down completely randomly.
Pair Corralation between NMI Holdings and Flowers Foods
Assuming the 90 days horizon NMI Holdings is expected to under-perform the Flowers Foods. In addition to that, NMI Holdings is 1.58 times more volatile than Flowers Foods. It trades about -0.14 of its total potential returns per unit of risk. Flowers Foods is currently generating about -0.11 per unit of volatility. If you would invest 2,060 in Flowers Foods on October 9, 2024 and sell it today you would lose (40.00) from holding Flowers Foods or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Flowers Foods
Performance |
| Timeline |
| NMI Holdings |
| Flowers Foods |
NMI Holdings and Flowers Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Flowers Foods
The main advantage of trading using opposite NMI Holdings and Flowers Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Flowers Foods 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 Flowers Foods will offset losses from the drop in Flowers Foods' long position.| NMI Holdings vs. Columbia Sportswear | NMI Holdings vs. ADRIATIC METALS LS 013355 | NMI Holdings vs. FIREWEED METALS P | NMI Holdings vs. Playtech plc |
| Flowers Foods vs. Superior Plus Corp | Flowers Foods vs. NMI Holdings | Flowers Foods vs. SIVERS SEMICONDUCTORS AB | Flowers Foods vs. Talanx AG |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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