Correlation Between NMI Holdings and Xcel Energy
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Xcel Energy 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 Xcel Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Xcel Energy, you can compare the effects of market volatilities on NMI Holdings and Xcel Energy 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 Xcel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Xcel Energy.
Diversification Opportunities for NMI Holdings and Xcel Energy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and Xcel is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Xcel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Energy 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 Xcel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Energy has no effect on the direction of NMI Holdings i.e., NMI Holdings and Xcel Energy go up and down completely randomly.
Pair Corralation between NMI Holdings and Xcel Energy
Assuming the 90 days horizon NMI Holdings is expected to generate 1.44 times more return on investment than Xcel Energy. However, NMI Holdings is 1.44 times more volatile than Xcel Energy. It trades about -0.06 of its potential returns per unit of risk. Xcel Energy is currently generating about -0.18 per unit of risk. If you would invest 3,760 in NMI Holdings on October 30, 2024 and sell it today you would lose (160.00) from holding NMI Holdings or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Xcel Energy
Performance |
| Timeline |
| NMI Holdings |
| Xcel Energy |
NMI Holdings and Xcel Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Xcel Energy
The main advantage of trading using opposite NMI Holdings and Xcel Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Xcel Energy 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 Xcel Energy will offset losses from the drop in Xcel Energy's long position.| NMI Holdings vs. GREENX METALS LTD | NMI Holdings vs. Perseus Mining Limited | NMI Holdings vs. Fortescue Metals Group | NMI Holdings vs. ARDAGH METAL PACDL 0001 |
| Xcel Energy vs. NextEra Energy | Xcel Energy vs. The Southern | Xcel Energy vs. VERBUND AG | Xcel Energy vs. PGE Corporation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| CEOs Directory Screen CEOs from public companies around the world | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |