Correlation Between NMI Holdings and Clearway Energy
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Clearway 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 Clearway 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 Clearway Energy, you can compare the effects of market volatilities on NMI Holdings and Clearway 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 Clearway Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Clearway Energy.
Diversification Opportunities for NMI Holdings and Clearway Energy
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Clearway is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Clearway Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway 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 Clearway Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy has no effect on the direction of NMI Holdings i.e., NMI Holdings and Clearway Energy go up and down completely randomly.
Pair Corralation between NMI Holdings and Clearway Energy
Assuming the 90 days horizon NMI Holdings is expected to generate 0.79 times more return on investment than Clearway Energy. However, NMI Holdings is 1.26 times less risky than Clearway Energy. It trades about 0.07 of its potential returns per unit of risk. Clearway Energy is currently generating about 0.0 per unit of risk. If you would invest 2,160 in NMI Holdings on October 30, 2024 and sell it today you would earn a total of 1,440 from holding NMI Holdings or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Clearway Energy
Performance |
| Timeline |
| NMI Holdings |
| Clearway Energy |
NMI Holdings and Clearway Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Clearway Energy
The main advantage of trading using opposite NMI Holdings and Clearway Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Clearway 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 Clearway Energy will offset losses from the drop in Clearway 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 |
| Clearway Energy vs. CODERE ONLINE LUX | Clearway Energy vs. Alliance Data Systems | Clearway Energy vs. MUTUIONLINE | Clearway Energy vs. INFORMATION SVC GRP |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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