Correlation Between NMI Holdings and E3 LITHIUM
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and E3 LITHIUM 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 E3 LITHIUM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and E3 LITHIUM LTD, you can compare the effects of market volatilities on NMI Holdings and E3 LITHIUM 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 E3 LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and E3 LITHIUM.
Diversification Opportunities for NMI Holdings and E3 LITHIUM
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and OW3 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and E3 LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E3 LITHIUM LTD 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 E3 LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E3 LITHIUM LTD has no effect on the direction of NMI Holdings i.e., NMI Holdings and E3 LITHIUM go up and down completely randomly.
Pair Corralation between NMI Holdings and E3 LITHIUM
Assuming the 90 days horizon NMI Holdings is expected to under-perform the E3 LITHIUM. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.9 times less risky than E3 LITHIUM. The stock trades about -0.09 of its potential returns per unit of risk. The E3 LITHIUM LTD is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 63.00 in E3 LITHIUM LTD on October 10, 2024 and sell it today you would earn a total of 9.00 from holding E3 LITHIUM LTD or generate 14.29% 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. E3 LITHIUM LTD
Performance |
| Timeline |
| NMI Holdings |
| E3 LITHIUM LTD |
NMI Holdings and E3 LITHIUM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and E3 LITHIUM
The main advantage of trading using opposite NMI Holdings and E3 LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, E3 LITHIUM 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 E3 LITHIUM will offset losses from the drop in E3 LITHIUM's long position.| NMI Holdings vs. Austevoll Seafood ASA | NMI Holdings vs. alstria office REIT AG | NMI Holdings vs. United Natural Foods | NMI Holdings vs. CITY OFFICE REIT |
| E3 LITHIUM vs. WESANA HEALTH HOLD | E3 LITHIUM vs. Zurich Insurance Group | E3 LITHIUM vs. MPH Health Care | E3 LITHIUM vs. Insurance Australia Group |
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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