Correlation Between NMI Holdings and Haleon PLC
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Haleon PLC 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 Haleon PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Haleon PLC, you can compare the effects of market volatilities on NMI Holdings and Haleon PLC 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 Haleon PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Haleon PLC.
Diversification Opportunities for NMI Holdings and Haleon PLC
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Haleon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Haleon PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon PLC 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 Haleon PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haleon PLC has no effect on the direction of NMI Holdings i.e., NMI Holdings and Haleon PLC go up and down completely randomly.
Pair Corralation between NMI Holdings and Haleon PLC
Assuming the 90 days horizon NMI Holdings is expected to generate 0.6 times more return on investment than Haleon PLC. However, NMI Holdings is 1.67 times less risky than Haleon PLC. It trades about 0.09 of its potential returns per unit of risk. Haleon PLC is currently generating about 0.03 per unit of risk. If you would invest 1,930 in NMI Holdings on September 12, 2024 and sell it today you would earn a total of 1,770 from holding NMI Holdings or generate 91.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Haleon PLC
Performance |
| Timeline |
| NMI Holdings |
| Haleon PLC |
NMI Holdings and Haleon PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Haleon PLC
The main advantage of trading using opposite NMI Holdings and Haleon PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Haleon PLC 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 Haleon PLC will offset losses from the drop in Haleon PLC's long position.| NMI Holdings vs. Nufarm Limited | NMI Holdings vs. AVITA Medical | NMI Holdings vs. Sterling Construction | NMI Holdings vs. Avanos Medical |
| Haleon PLC vs. CanSino Biologics | Haleon PLC vs. Superior Plus Corp | Haleon PLC vs. SIVERS SEMICONDUCTORS AB | Haleon PLC vs. CHINA HUARONG ENERHD 50 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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