Correlation Between NMI Holdings and ORIX
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and ORIX 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 ORIX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and ORIX Corporation, you can compare the effects of market volatilities on NMI Holdings and ORIX 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 ORIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and ORIX.
Diversification Opportunities for NMI Holdings and ORIX
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NMI and ORIX is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and ORIX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX 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 ORIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX has no effect on the direction of NMI Holdings i.e., NMI Holdings and ORIX go up and down completely randomly.
Pair Corralation between NMI Holdings and ORIX
Assuming the 90 days horizon NMI Holdings is expected to under-perform the ORIX. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.03 times less risky than ORIX. The stock trades about -0.05 of its potential returns per unit of risk. The ORIX Corporation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,890 in ORIX Corporation on August 25, 2024 and sell it today you would earn a total of 90.00 from holding ORIX Corporation or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. ORIX Corp.
Performance |
| Timeline |
| NMI Holdings |
| ORIX |
NMI Holdings and ORIX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and ORIX
The main advantage of trading using opposite NMI Holdings and ORIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, ORIX 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 ORIX will offset losses from the drop in ORIX's long position.| NMI Holdings vs. Lion One Metals | NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. OFFICE DEPOT | NMI Holdings vs. JAPAN TOBACCO UNSPADR12 |
| ORIX vs. Superior Plus Corp | ORIX vs. NMI Holdings | ORIX vs. Origin Agritech | ORIX 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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