Correlation Between NMI Holdings and Mercedes-Benz Group
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Mercedes-Benz Group 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 Mercedes-Benz Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Mercedes Benz Group AG, you can compare the effects of market volatilities on NMI Holdings and Mercedes-Benz Group 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 Mercedes-Benz Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Mercedes-Benz Group.
Diversification Opportunities for NMI Holdings and Mercedes-Benz Group
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and Mercedes-Benz is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Mercedes Benz Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercedes Benz Group 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 Mercedes-Benz Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercedes Benz Group has no effect on the direction of NMI Holdings i.e., NMI Holdings and Mercedes-Benz Group go up and down completely randomly.
Pair Corralation between NMI Holdings and Mercedes-Benz Group
Assuming the 90 days horizon NMI Holdings is expected to generate 1.31 times more return on investment than Mercedes-Benz Group. However, NMI Holdings is 1.31 times more volatile than Mercedes Benz Group AG. It trades about 0.1 of its potential returns per unit of risk. Mercedes Benz Group AG is currently generating about -0.12 per unit of risk. If you would invest 3,580 in NMI Holdings on September 1, 2024 and sell it today you would earn a total of 180.00 from holding NMI Holdings or generate 5.03% 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. Mercedes Benz Group AG
Performance |
| Timeline |
| NMI Holdings |
| Mercedes Benz Group |
NMI Holdings and Mercedes-Benz Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Mercedes-Benz Group
The main advantage of trading using opposite NMI Holdings and Mercedes-Benz Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Mercedes-Benz Group 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 Mercedes-Benz Group will offset losses from the drop in Mercedes-Benz Group's long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| Mercedes-Benz Group vs. OAKTRSPECLENDNEW | Mercedes-Benz Group vs. TRAVEL LEISURE DL 01 | Mercedes-Benz Group vs. PLAYSTUDIOS A DL 0001 | Mercedes-Benz Group vs. Ameriprise Financial |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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