Correlation Between NMI Holdings and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and NAKED WINES 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 NAKED WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and NAKED WINES PLC, you can compare the effects of market volatilities on NMI Holdings and NAKED WINES 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 NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and NAKED WINES.
Diversification Opportunities for NMI Holdings and NAKED WINES
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and NAKED is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES PLC 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 NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of NMI Holdings i.e., NMI Holdings and NAKED WINES go up and down completely randomly.
Pair Corralation between NMI Holdings and NAKED WINES
Assuming the 90 days horizon NMI Holdings is expected to generate 0.89 times more return on investment than NAKED WINES. However, NMI Holdings is 1.12 times less risky than NAKED WINES. It trades about 0.05 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about -0.09 per unit of risk. If you would invest 3,580 in NMI Holdings on August 28, 2024 and sell it today you would earn a total of 60.00 from holding NMI Holdings or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NMI Holdings vs. NAKED WINES PLC
Performance |
| Timeline |
| NMI Holdings |
| NAKED WINES PLC |
NMI Holdings and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and NAKED WINES
The main advantage of trading using opposite NMI Holdings and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, NAKED WINES 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 NAKED WINES will offset losses from the drop in NAKED WINES's long position.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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