Correlation Between NMI Holdings and Phibro Animal
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Phibro Animal 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 Phibro Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Phibro Animal Health, you can compare the effects of market volatilities on NMI Holdings and Phibro Animal 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 Phibro Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Phibro Animal.
Diversification Opportunities for NMI Holdings and Phibro Animal
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMI and Phibro is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health 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 Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of NMI Holdings i.e., NMI Holdings and Phibro Animal go up and down completely randomly.
Pair Corralation between NMI Holdings and Phibro Animal
Assuming the 90 days horizon NMI Holdings is expected to generate 1.14 times less return on investment than Phibro Animal. But when comparing it to its historical volatility, NMI Holdings is 1.8 times less risky than Phibro Animal. It trades about 0.07 of its potential returns per unit of risk. Phibro Animal Health is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,288 in Phibro Animal Health on October 14, 2024 and sell it today you would earn a total of 792.00 from holding Phibro Animal Health or generate 61.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Phibro Animal Health
Performance |
| Timeline |
| NMI Holdings |
| Phibro Animal Health |
NMI Holdings and Phibro Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Phibro Animal
The main advantage of trading using opposite NMI Holdings and Phibro Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Phibro Animal 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 Phibro Animal will offset losses from the drop in Phibro Animal's long position.| NMI Holdings vs. PDS Biotechnology Corp | NMI Holdings vs. ANTA SPORTS PRODUCT | NMI Holdings vs. SOEDER SPORTFISKE AB | NMI Holdings vs. Platinum Investment Management |
| Phibro Animal vs. Superior Plus Corp | Phibro Animal vs. NMI Holdings | Phibro Animal vs. SIVERS SEMICONDUCTORS AB | Phibro Animal vs. Talanx AG |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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