Correlation Between NMI Holdings and Imperial Metals
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Imperial Metals 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 Imperial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Imperial Metals, you can compare the effects of market volatilities on NMI Holdings and Imperial Metals 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 Imperial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Imperial Metals.
Diversification Opportunities for NMI Holdings and Imperial Metals
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Imperial is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Imperial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Metals 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 Imperial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Metals has no effect on the direction of NMI Holdings i.e., NMI Holdings and Imperial Metals go up and down completely randomly.
Pair Corralation between NMI Holdings and Imperial Metals
Assuming the 90 days horizon NMI Holdings is expected to generate 0.5 times more return on investment than Imperial Metals. However, NMI Holdings is 2.0 times less risky than Imperial Metals. It trades about 0.08 of its potential returns per unit of risk. Imperial Metals is currently generating about 0.02 per unit of risk. If you would invest 2,040 in NMI Holdings on December 4, 2024 and sell it today you would earn a total of 1,420 from holding NMI Holdings or generate 69.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Imperial Metals
Performance |
| Timeline |
| NMI Holdings |
| Imperial Metals |
NMI Holdings and Imperial Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Imperial Metals
The main advantage of trading using opposite NMI Holdings and Imperial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Imperial Metals 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 Imperial Metals will offset losses from the drop in Imperial Metals' long position.| NMI Holdings vs. tokentus investment AG | NMI Holdings vs. Gladstone Investment | NMI Holdings vs. PennantPark Investment | NMI Holdings vs. JLF INVESTMENT |
| Imperial Metals vs. Cellnex Telecom SA | Imperial Metals vs. Chengdu PUTIAN Telecommunications | Imperial Metals vs. Harmony Gold Mining | Imperial Metals vs. De Grey Mining |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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