Correlation Between NMI Holdings and Hartford Financial
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Hartford Financial 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 Hartford Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and The Hartford Financial, you can compare the effects of market volatilities on NMI Holdings and Hartford Financial 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 Hartford Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Hartford Financial.
Diversification Opportunities for NMI Holdings and Hartford Financial
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and Hartford is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and The Hartford Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Financial 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 Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Financial has no effect on the direction of NMI Holdings i.e., NMI Holdings and Hartford Financial go up and down completely randomly.
Pair Corralation between NMI Holdings and Hartford Financial
Assuming the 90 days horizon NMI Holdings is expected to generate 1.41 times less return on investment than Hartford Financial. In addition to that, NMI Holdings is 1.17 times more volatile than The Hartford Financial. It trades about 0.04 of its total potential returns per unit of risk. The Hartford Financial is currently generating about 0.07 per unit of volatility. If you would invest 10,254 in The Hartford Financial on September 12, 2024 and sell it today you would earn a total of 646.00 from holding The Hartford Financial or generate 6.3% 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. The Hartford Financial
Performance |
| Timeline |
| NMI Holdings |
| The Hartford Financial |
NMI Holdings and Hartford Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Hartford Financial
The main advantage of trading using opposite NMI Holdings and Hartford Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Hartford Financial 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 Hartford Financial will offset losses from the drop in Hartford Financial's long position.| NMI Holdings vs. Nufarm Limited | NMI Holdings vs. AVITA Medical | NMI Holdings vs. Sterling Construction | NMI Holdings vs. Avanos Medical |
| Hartford Financial vs. Zurich Insurance Group | Hartford Financial vs. Superior Plus Corp | Hartford Financial vs. SIVERS SEMICONDUCTORS AB | Hartford Financial 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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