Correlation Between NMI Holdings and PNC Financial
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and PNC Financial 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 PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and The PNC Financial, you can compare the effects of market volatilities on NMI Holdings and PNC Financial 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 PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and PNC Financial.
Diversification Opportunities for NMI Holdings and PNC Financial
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and PNC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and The PNC Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial 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 PNC Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC Financial has no effect on the direction of NMI Holdings i.e., NMI Holdings and PNC Financial go up and down completely randomly.
Pair Corralation between NMI Holdings and PNC Financial
Assuming the 90 days horizon NMI Holdings is expected to generate 7.06 times less return on investment than PNC Financial. But when comparing it to its historical volatility, NMI Holdings is 1.07 times less risky than PNC Financial. It trades about 0.04 of its potential returns per unit of risk. The PNC Financial is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 17,200 in The PNC Financial on August 28, 2024 and sell it today you would earn a total of 2,800 from holding The PNC Financial or generate 16.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. The PNC Financial
Performance |
| Timeline |
| NMI Holdings |
| PNC Financial |
NMI Holdings and PNC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and PNC Financial
The main advantage of trading using opposite NMI Holdings and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, PNC Financial 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 PNC Financial will offset losses from the drop in PNC Financial's long position.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
| PNC Financial vs. Superior Plus Corp | PNC Financial vs. NMI Holdings | PNC Financial vs. Origin Agritech | PNC Financial 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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