Correlation Between NMI Holdings and Ipsen SA
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Ipsen 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 Ipsen 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 Ipsen SA, you can compare the effects of market volatilities on NMI Holdings and Ipsen 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 Ipsen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Ipsen SA.
Diversification Opportunities for NMI Holdings and Ipsen SA
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and Ipsen is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Ipsen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsen 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 Ipsen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsen SA has no effect on the direction of NMI Holdings i.e., NMI Holdings and Ipsen SA go up and down completely randomly.
Pair Corralation between NMI Holdings and Ipsen SA
Assuming the 90 days horizon NMI Holdings is expected to generate 1.65 times more return on investment than Ipsen SA. However, NMI Holdings is 1.65 times more volatile than Ipsen SA. It trades about 0.06 of its potential returns per unit of risk. Ipsen SA is currently generating about -0.16 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Ipsen SA
Performance |
| Timeline |
| NMI Holdings |
| Ipsen SA |
NMI Holdings and Ipsen SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Ipsen SA
The main advantage of trading using opposite NMI Holdings and Ipsen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Ipsen 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 Ipsen SA will offset losses from the drop in Ipsen 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 |
| Ipsen SA vs. Superior Plus Corp | Ipsen SA vs. NMI Holdings | Ipsen SA vs. SIVERS SEMICONDUCTORS AB | Ipsen SA vs. Talanx AG |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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