Correlation Between NMI Holdings and Nufarm
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Nufarm 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 Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Nufarm Limited, you can compare the effects of market volatilities on NMI Holdings and Nufarm 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 Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Nufarm.
Diversification Opportunities for NMI Holdings and Nufarm
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Nufarm is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited 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 Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of NMI Holdings i.e., NMI Holdings and Nufarm go up and down completely randomly.
Pair Corralation between NMI Holdings and Nufarm
Assuming the 90 days horizon NMI Holdings is expected to generate 0.86 times more return on investment than Nufarm. However, NMI Holdings is 1.16 times less risky than Nufarm. It trades about 0.09 of its potential returns per unit of risk. Nufarm Limited is currently generating about -0.04 per unit of risk. If you would invest 1,870 in NMI Holdings on August 30, 2024 and sell it today you would earn a total of 1,810 from holding NMI Holdings or generate 96.79% 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. Nufarm Limited
Performance |
| Timeline |
| NMI Holdings |
| Nufarm Limited |
NMI Holdings and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Nufarm
The main advantage of trading using opposite NMI Holdings and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Nufarm 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 Nufarm will offset losses from the drop in Nufarm's long position.| NMI Holdings vs. Boyd Gaming | NMI Holdings vs. SEI INVESTMENTS | NMI Holdings vs. HK Electric Investments | NMI Holdings vs. WisdomTree Investments |
| Nufarm vs. Superior Plus Corp | Nufarm vs. NMI Holdings | Nufarm vs. Origin Agritech | Nufarm vs. SIVERS SEMICONDUCTORS AB |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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