Correlation Between NMI Holdings and Altria
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Altria 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 Altria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Altria Group, you can compare the effects of market volatilities on NMI Holdings and Altria 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 Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Altria.
Diversification Opportunities for NMI Holdings and Altria
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NMI and Altria is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group 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 Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group has no effect on the direction of NMI Holdings i.e., NMI Holdings and Altria go up and down completely randomly.
Pair Corralation between NMI Holdings and Altria
Assuming the 90 days horizon NMI Holdings is expected to generate 4.91 times less return on investment than Altria. In addition to that, NMI Holdings is 1.25 times more volatile than Altria Group. It trades about 0.06 of its total potential returns per unit of risk. Altria Group is currently generating about 0.37 per unit of volatility. If you would invest 4,654 in Altria Group on August 29, 2024 and sell it today you would earn a total of 826.00 from holding Altria Group or generate 17.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Altria Group
Performance |
| Timeline |
| NMI Holdings |
| Altria Group |
NMI Holdings and Altria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Altria
The main advantage of trading using opposite NMI Holdings and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Altria 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 Altria will offset losses from the drop in Altria's long position.| NMI Holdings vs. Boyd Gaming | NMI Holdings vs. SEI INVESTMENTS | NMI Holdings vs. HK Electric Investments | NMI Holdings vs. WisdomTree Investments |
| Altria vs. British American Tobacco | Altria vs. JAPAN TOBACCO UNSPADR12 | Altria vs. Superior Plus Corp | Altria vs. NMI Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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