Correlation Between NMI Holdings and LANSON-BCC INH
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and LANSON-BCC INH 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 LANSON-BCC INH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and LANSON BCC INH EO, you can compare the effects of market volatilities on NMI Holdings and LANSON-BCC INH 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 LANSON-BCC INH. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and LANSON-BCC INH.
Diversification Opportunities for NMI Holdings and LANSON-BCC INH
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and LANSON-BCC is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and LANSON BCC INH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANSON BCC INH 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 LANSON-BCC INH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANSON BCC INH has no effect on the direction of NMI Holdings i.e., NMI Holdings and LANSON-BCC INH go up and down completely randomly.
Pair Corralation between NMI Holdings and LANSON-BCC INH
Assuming the 90 days horizon NMI Holdings is expected to generate 1.04 times more return on investment than LANSON-BCC INH. However, NMI Holdings is 1.04 times more volatile than LANSON BCC INH EO. It trades about 0.09 of its potential returns per unit of risk. LANSON BCC INH EO is currently generating about 0.03 per unit of risk. If you would invest 1,900 in NMI Holdings on September 3, 2024 and sell it today you would earn a total of 1,860 from holding NMI Holdings or generate 97.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. LANSON BCC INH EO
Performance |
| Timeline |
| NMI Holdings |
| LANSON BCC INH |
NMI Holdings and LANSON-BCC INH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and LANSON-BCC INH
The main advantage of trading using opposite NMI Holdings and LANSON-BCC INH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, LANSON-BCC INH 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 LANSON-BCC INH will offset losses from the drop in LANSON-BCC INH's 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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