Correlation Between NMI Holdings and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Lowes Companies 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 Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Lowes Companies, you can compare the effects of market volatilities on NMI Holdings and Lowes Companies 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 Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Lowes Companies.
Diversification Opportunities for NMI Holdings and Lowes Companies
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and Lowes is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of NMI Holdings i.e., NMI Holdings and Lowes Companies go up and down completely randomly.
Pair Corralation between NMI Holdings and Lowes Companies
Assuming the 90 days horizon NMI Holdings is expected to generate 1.17 times less return on investment than Lowes Companies. But when comparing it to its historical volatility, NMI Holdings is 1.06 times less risky than Lowes Companies. It trades about 0.12 of its potential returns per unit of risk. Lowes Companies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 19,784 in Lowes Companies on September 5, 2024 and sell it today you would earn a total of 6,036 from holding Lowes Companies or generate 30.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
NMI Holdings vs. Lowes Companies
Performance |
| Timeline |
| NMI Holdings |
| Lowes Companies |
NMI Holdings and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Lowes Companies
The main advantage of trading using opposite NMI Holdings and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| NMI Holdings vs. HYATT HOTELS A | NMI Holdings vs. Pebblebrook Hotel Trust | NMI Holdings vs. Penta Ocean Construction Co | NMI Holdings vs. Dalata Hotel Group |
| Lowes Companies vs. KINGBOARD CHEMICAL | Lowes Companies vs. Quaker Chemical | Lowes Companies vs. NISSAN CHEMICAL IND | Lowes Companies vs. SEKISUI CHEMICAL |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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