Correlation Between NMI Holdings and Engie SA
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Engie SA 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 Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Engie SA, you can compare the effects of market volatilities on NMI Holdings and Engie SA 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 Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Engie SA.
Diversification Opportunities for NMI Holdings and Engie SA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Engie is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA 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 Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of NMI Holdings i.e., NMI Holdings and Engie SA go up and down completely randomly.
Pair Corralation between NMI Holdings and Engie SA
Assuming the 90 days horizon NMI Holdings is expected to generate 3.03 times more return on investment than Engie SA. However, NMI Holdings is 3.03 times more volatile than Engie SA. It trades about 0.07 of its potential returns per unit of risk. Engie SA is currently generating about -0.18 per unit of risk. If you would invest 3,580 in NMI Holdings on August 29, 2024 and sell it today you would earn a total of 100.00 from holding NMI Holdings or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NMI Holdings vs. Engie SA
Performance |
| Timeline |
| NMI Holdings |
| Engie SA |
NMI Holdings and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Engie SA
The main advantage of trading using opposite NMI Holdings and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Engie SA 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 Engie SA will offset losses from the drop in Engie SA's long position.| NMI Holdings vs. Boyd Gaming | NMI Holdings vs. SEI INVESTMENTS | NMI Holdings vs. HK Electric Investments | NMI Holdings vs. WisdomTree Investments |
| Engie SA vs. Consolidated Communications Holdings | Engie SA vs. Mobilezone Holding AG | Engie SA vs. WillScot Mobile Mini | Engie SA vs. Shenandoah Telecommunications |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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