Correlation Between NMI Holdings and Royal Caribbean
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Royal Caribbean 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 Royal Caribbean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Royal Caribbean Group, you can compare the effects of market volatilities on NMI Holdings and Royal Caribbean 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 Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Royal Caribbean.
Diversification Opportunities for NMI Holdings and Royal Caribbean
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Royal is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Royal Caribbean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Group has no effect on the direction of NMI Holdings i.e., NMI Holdings and Royal Caribbean go up and down completely randomly.
Pair Corralation between NMI Holdings and Royal Caribbean
Assuming the 90 days horizon NMI Holdings is expected to generate 17.98 times less return on investment than Royal Caribbean. But when comparing it to its historical volatility, NMI Holdings is 1.2 times less risky than Royal Caribbean. It trades about 0.02 of its potential returns per unit of risk. Royal Caribbean Group is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 14,694 in Royal Caribbean Group on September 2, 2024 and sell it today you would earn a total of 8,276 from holding Royal Caribbean Group or generate 56.32% 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. Royal Caribbean Group
Performance |
| Timeline |
| NMI Holdings |
| Royal Caribbean Group |
NMI Holdings and Royal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Royal Caribbean
The main advantage of trading using opposite NMI Holdings and Royal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Royal Caribbean 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 Royal Caribbean will offset losses from the drop in Royal Caribbean's long position.| NMI Holdings vs. Taylor Morrison Home | NMI Holdings vs. ATRYS HEALTH SA | NMI Holdings vs. National Health Investors | NMI Holdings vs. Bumrungrad Hospital Public |
| Royal Caribbean vs. Microbot Medical | Royal Caribbean vs. CVW CLEANTECH INC | Royal Caribbean vs. CODERE ONLINE LUX | Royal Caribbean vs. AVITA Medical |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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