Correlation Between NMI Holdings and Netflix
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Netflix 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 Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Netflix, you can compare the effects of market volatilities on NMI Holdings and Netflix 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 Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Netflix.
Diversification Opportunities for NMI Holdings and Netflix
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Netflix is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix 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 Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of NMI Holdings i.e., NMI Holdings and Netflix go up and down completely randomly.
Pair Corralation between NMI Holdings and Netflix
Assuming the 90 days horizon NMI Holdings is expected to under-perform the Netflix. In addition to that, NMI Holdings is 1.47 times more volatile than Netflix. It trades about -0.05 of its total potential returns per unit of risk. Netflix is currently generating about 0.55 per unit of volatility. If you would invest 69,650 in Netflix on August 25, 2024 and sell it today you would earn a total of 14,160 from holding Netflix or generate 20.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Netflix
Performance |
| Timeline |
| NMI Holdings |
| Netflix |
NMI Holdings and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Netflix
The main advantage of trading using opposite NMI Holdings and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Netflix 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 Netflix will offset losses from the drop in Netflix's long position.| NMI Holdings vs. USWE SPORTS AB | NMI Holdings vs. GungHo Online Entertainment | NMI Holdings vs. Ming Le Sports | NMI Holdings vs. DICKS Sporting Goods |
| Netflix vs. INTERCONT HOTELS | Netflix vs. Electronic Arts | Netflix vs. Hyatt Hotels | Netflix vs. Wyndham Hotels Resorts |
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 Stocks Directory module to find actively traded stocks across global markets.
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