Correlation Between NMI Holdings and Range Resources
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Range Resources 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 Range Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Range Resources Corp, you can compare the effects of market volatilities on NMI Holdings and Range Resources 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 Range Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Range Resources.
Diversification Opportunities for NMI Holdings and Range Resources
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Range is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Range Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Range Resources Corp 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 Range Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Range Resources Corp has no effect on the direction of NMI Holdings i.e., NMI Holdings and Range Resources go up and down completely randomly.
Pair Corralation between NMI Holdings and Range Resources
Assuming the 90 days horizon NMI Holdings is expected to generate 1.18 times less return on investment than Range Resources. In addition to that, NMI Holdings is 1.52 times more volatile than Range Resources Corp. It trades about 0.11 of its total potential returns per unit of risk. Range Resources Corp is currently generating about 0.2 per unit of volatility. If you would invest 5,380 in Range Resources Corp on August 28, 2024 and sell it today you would earn a total of 1,620 from holding Range Resources Corp or generate 30.11% 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. Range Resources Corp
Performance |
| Timeline |
| NMI Holdings |
| Range Resources Corp |
NMI Holdings and Range Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Range Resources
The main advantage of trading using opposite NMI Holdings and Range Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Range Resources 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 Range Resources will offset losses from the drop in Range Resources' 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 |
| Range Resources vs. Vicinity Centres | Range Resources vs. Superior Plus Corp | Range Resources vs. NMI Holdings | Range Resources vs. Origin Agritech |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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