Correlation Between NMI Holdings and Aurubis AG
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Aurubis AG 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 Aurubis AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Aurubis AG, you can compare the effects of market volatilities on NMI Holdings and Aurubis AG 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 Aurubis AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Aurubis AG.
Diversification Opportunities for NMI Holdings and Aurubis AG
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Aurubis is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Aurubis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurubis AG 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 Aurubis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurubis AG has no effect on the direction of NMI Holdings i.e., NMI Holdings and Aurubis AG go up and down completely randomly.
Pair Corralation between NMI Holdings and Aurubis AG
Assuming the 90 days horizon NMI Holdings is expected to generate 1.37 times less return on investment than Aurubis AG. But when comparing it to its historical volatility, NMI Holdings is 1.52 times less risky than Aurubis AG. It trades about 0.08 of its potential returns per unit of risk. Aurubis AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,020 in Aurubis AG on December 4, 2024 and sell it today you would earn a total of 2,425 from holding Aurubis AG or generate 40.28% 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. Aurubis AG
Performance |
| Timeline |
| NMI Holdings |
| Aurubis AG |
NMI Holdings and Aurubis AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Aurubis AG
The main advantage of trading using opposite NMI Holdings and Aurubis AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Aurubis AG 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 Aurubis AG will offset losses from the drop in Aurubis AG's long position.| NMI Holdings vs. tokentus investment AG | NMI Holdings vs. Gladstone Investment | NMI Holdings vs. PennantPark Investment | NMI Holdings vs. JLF INVESTMENT |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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