Correlation Between NMI Holdings and Marks
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Marks 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 Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Marks and Spencer, you can compare the effects of market volatilities on NMI Holdings and Marks 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 Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Marks.
Diversification Opportunities for NMI Holdings and Marks
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and Marks is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of NMI Holdings i.e., NMI Holdings and Marks go up and down completely randomly.
Pair Corralation between NMI Holdings and Marks
Assuming the 90 days horizon NMI Holdings is expected to generate 1.8 times less return on investment than Marks. But when comparing it to its historical volatility, NMI Holdings is 1.63 times less risky than Marks. It trades about 0.09 of its potential returns per unit of risk. Marks and Spencer is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 224.00 in Marks and Spencer on September 12, 2024 and sell it today you would earn a total of 250.00 from holding Marks and Spencer or generate 111.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Marks and Spencer
Performance |
| Timeline |
| NMI Holdings |
| Marks and Spencer |
NMI Holdings and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Marks
The main advantage of trading using opposite NMI Holdings and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| NMI Holdings vs. Nufarm Limited | NMI Holdings vs. AVITA Medical | NMI Holdings vs. Sterling Construction | NMI Holdings vs. Avanos Medical |
| Marks vs. RYOHIN UNSPADR1 | Marks vs. Superior Plus Corp | Marks vs. SIVERS SEMICONDUCTORS AB | Marks vs. NorAm Drilling AS |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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