Correlation Between NMI Holdings and Laureate Education
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Laureate Education 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 Laureate Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Laureate Education, you can compare the effects of market volatilities on NMI Holdings and Laureate Education 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Laureate Education.
Diversification Opportunities for NMI Holdings and Laureate Education
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Laureate is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of NMI Holdings i.e., NMI Holdings and Laureate Education go up and down completely randomly.
Pair Corralation between NMI Holdings and Laureate Education
Assuming the 90 days horizon NMI Holdings is expected to generate 1.3 times less return on investment than Laureate Education. But when comparing it to its historical volatility, NMI Holdings is 1.45 times less risky than Laureate Education. It trades about 0.11 of its potential returns per unit of risk. Laureate Education is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,380 in Laureate Education on September 2, 2024 and sell it today you would earn a total of 400.00 from holding Laureate Education or generate 28.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Laureate Education
Performance |
| Timeline |
| NMI Holdings |
| Laureate Education |
NMI Holdings and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Laureate Education
The main advantage of trading using opposite NMI Holdings and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| NMI Holdings vs. Taylor Morrison Home | NMI Holdings vs. ATRYS HEALTH SA | NMI Holdings vs. National Health Investors | NMI Holdings vs. Bumrungrad Hospital Public |
| Laureate Education vs. Superior Plus Corp | Laureate Education vs. NMI Holdings | Laureate Education vs. Origin Agritech | Laureate Education vs. SIVERS SEMICONDUCTORS AB |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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