Correlation Between NMI Holdings and Regions Financial
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Regions 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 Regions 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 Regions Financial, you can compare the effects of market volatilities on NMI Holdings and Regions 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 Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Regions Financial.
Diversification Opportunities for NMI Holdings and Regions Financial
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Regions is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions 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 Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial has no effect on the direction of NMI Holdings i.e., NMI Holdings and Regions Financial go up and down completely randomly.
Pair Corralation between NMI Holdings and Regions Financial
Assuming the 90 days horizon NMI Holdings is expected to generate 2.17 times less return on investment than Regions Financial. But when comparing it to its historical volatility, NMI Holdings is 1.14 times less risky than Regions Financial. It trades about 0.09 of its potential returns per unit of risk. Regions Financial is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,705 in Regions Financial on August 25, 2024 and sell it today you would earn a total of 775.00 from holding Regions Financial or generate 45.45% 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. Regions Financial
Performance |
| Timeline |
| NMI Holdings |
| Regions Financial |
NMI Holdings and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Regions Financial
The main advantage of trading using opposite NMI Holdings and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Regions 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 Regions Financial will offset losses from the drop in Regions Financial's long position.| NMI Holdings vs. Lion One Metals | NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. OFFICE DEPOT | NMI Holdings vs. JAPAN TOBACCO UNSPADR12 |
| Regions Financial vs. Superior Plus Corp | Regions Financial vs. NMI Holdings | Regions Financial vs. Origin Agritech | Regions 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 CEOs Directory module to screen CEOs from public companies around the world.
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