Correlation Between NMI Holdings and Sotherly Hotels
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Sotherly Hotels 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 Sotherly Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Sotherly Hotels, you can compare the effects of market volatilities on NMI Holdings and Sotherly Hotels 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 Sotherly Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Sotherly Hotels.
Diversification Opportunities for NMI Holdings and Sotherly Hotels
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Sotherly is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Sotherly Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sotherly Hotels 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 Sotherly Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sotherly Hotels has no effect on the direction of NMI Holdings i.e., NMI Holdings and Sotherly Hotels go up and down completely randomly.
Pair Corralation between NMI Holdings and Sotherly Hotels
Assuming the 90 days horizon NMI Holdings is expected to generate 0.37 times more return on investment than Sotherly Hotels. However, NMI Holdings is 2.68 times less risky than Sotherly Hotels. It trades about 0.11 of its potential returns per unit of risk. Sotherly Hotels is currently generating about -0.15 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 200.00 from holding NMI Holdings or generate 5.59% 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. Sotherly Hotels
Performance |
| Timeline |
| NMI Holdings |
| Sotherly Hotels |
NMI Holdings and Sotherly Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Sotherly Hotels
The main advantage of trading using opposite NMI Holdings and Sotherly Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Sotherly Hotels 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 Sotherly Hotels will offset losses from the drop in Sotherly Hotels' long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| Sotherly Hotels vs. Superior Plus Corp | Sotherly Hotels vs. NMI Holdings | Sotherly Hotels vs. Origin Agritech | Sotherly Hotels 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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