Correlation Between NMI Holdings and ENGIE ADR/1
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and ENGIE ADR/1 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 ADR/1 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 ADR1 EO, you can compare the effects of market volatilities on NMI Holdings and ENGIE ADR/1 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 ADR/1. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and ENGIE ADR/1.
Diversification Opportunities for NMI Holdings and ENGIE ADR/1
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and ENGIE is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and ENGIE ADR1 EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGIE ADR1 EO 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 ADR/1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGIE ADR1 EO has no effect on the direction of NMI Holdings i.e., NMI Holdings and ENGIE ADR/1 go up and down completely randomly.
Pair Corralation between NMI Holdings and ENGIE ADR/1
Assuming the 90 days horizon NMI Holdings is expected to generate 1.3 times more return on investment than ENGIE ADR/1. However, NMI Holdings is 1.3 times more volatile than ENGIE ADR1 EO. It trades about 0.09 of its potential returns per unit of risk. ENGIE ADR1 EO is currently generating about 0.03 per unit of risk. If you would invest 2,420 in NMI Holdings on September 1, 2024 and sell it today you would earn a total of 1,360 from holding NMI Holdings or generate 56.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
NMI Holdings vs. ENGIE ADR1 EO
Performance |
| Timeline |
| NMI Holdings |
| ENGIE ADR1 EO |
NMI Holdings and ENGIE ADR/1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and ENGIE ADR/1
The main advantage of trading using opposite NMI Holdings and ENGIE ADR/1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, ENGIE ADR/1 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 ADR/1 will offset losses from the drop in ENGIE ADR/1's long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| ENGIE ADR/1 vs. BYD ELECTRONIC | ENGIE ADR/1 vs. AOI Electronics Co | ENGIE ADR/1 vs. INTERSHOP Communications Aktiengesellschaft | ENGIE ADR/1 vs. Taiwan Semiconductor Manufacturing |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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