Correlation Between NMI Holdings and Genco Shipping
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Genco Shipping 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 Genco Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Genco Shipping Trading, you can compare the effects of market volatilities on NMI Holdings and Genco Shipping 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 Genco Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Genco Shipping.
Diversification Opportunities for NMI Holdings and Genco Shipping
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMI and Genco is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading 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 Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of NMI Holdings i.e., NMI Holdings and Genco Shipping go up and down completely randomly.
Pair Corralation between NMI Holdings and Genco Shipping
Assuming the 90 days horizon NMI Holdings is expected to generate 1.99 times less return on investment than Genco Shipping. But when comparing it to its historical volatility, NMI Holdings is 1.08 times less risky than Genco Shipping. It trades about 0.02 of its potential returns per unit of risk. Genco Shipping Trading is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,510 in Genco Shipping Trading on August 28, 2024 and sell it today you would earn a total of 63.00 from holding Genco Shipping Trading or generate 4.17% 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. Genco Shipping Trading
Performance |
| Timeline |
| NMI Holdings |
| Genco Shipping Trading |
NMI Holdings and Genco Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Genco Shipping
The main advantage of trading using opposite NMI Holdings and Genco Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Genco Shipping 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 Genco Shipping will offset losses from the drop in Genco Shipping's long position.| NMI Holdings vs. Lion Biotechnologies | NMI Holdings vs. Digilife Technologies Limited | NMI Holdings vs. Food Life Companies | NMI Holdings vs. CONAGRA FOODS |
| Genco Shipping vs. GUARDANT HEALTH CL | Genco Shipping vs. Natural Health Trends | Genco Shipping vs. YOOMA WELLNESS INC | Genco Shipping vs. EPSILON HEALTHCARE LTD |
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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