Correlation Between NMI Holdings and Madison Square
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Madison Square 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 Madison Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Madison Square Garden, you can compare the effects of market volatilities on NMI Holdings and Madison Square 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 Madison Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Madison Square.
Diversification Opportunities for NMI Holdings and Madison Square
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and Madison is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Madison Square Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Square Garden 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 Madison Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Square Garden has no effect on the direction of NMI Holdings i.e., NMI Holdings and Madison Square go up and down completely randomly.
Pair Corralation between NMI Holdings and Madison Square
Assuming the 90 days horizon NMI Holdings is expected to generate 5.96 times less return on investment than Madison Square. In addition to that, NMI Holdings is 1.42 times more volatile than Madison Square Garden. It trades about 0.02 of its total potential returns per unit of risk. Madison Square Garden is currently generating about 0.19 per unit of volatility. If you would invest 18,800 in Madison Square Garden on September 2, 2024 and sell it today you would earn a total of 3,000 from holding Madison Square Garden or generate 15.96% 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. Madison Square Garden
Performance |
| Timeline |
| NMI Holdings |
| Madison Square Garden |
NMI Holdings and Madison Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Madison Square
The main advantage of trading using opposite NMI Holdings and Madison Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Madison Square 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 Madison Square will offset losses from the drop in Madison Square'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 |
| Madison Square vs. Li Ning Company | Madison Square vs. Trip Group Limited | Madison Square vs. Superior Plus Corp | Madison Square vs. NMI Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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