Correlation Between NMI Holdings and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Sandfire 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 Sandfire 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 Sandfire Resources Limited, you can compare the effects of market volatilities on NMI Holdings and Sandfire 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Sandfire Resources.
Diversification Opportunities for NMI Holdings and Sandfire Resources
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and Sandfire is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of NMI Holdings i.e., NMI Holdings and Sandfire Resources go up and down completely randomly.
Pair Corralation between NMI Holdings and Sandfire Resources
Assuming the 90 days horizon NMI Holdings is expected to generate 1.15 times less return on investment than Sandfire Resources. But when comparing it to its historical volatility, NMI Holdings is 1.54 times less risky than Sandfire Resources. It trades about 0.09 of its potential returns per unit of risk. Sandfire Resources Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 337.00 in Sandfire Resources Limited on September 13, 2024 and sell it today you would earn a total of 308.00 from holding Sandfire Resources Limited or generate 91.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Sandfire Resources Limited
Performance |
| Timeline |
| NMI Holdings |
| Sandfire Resources |
NMI Holdings and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Sandfire Resources
The main advantage of trading using opposite NMI Holdings and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Sandfire 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| NMI Holdings vs. JJ SNACK FOODS | NMI Holdings vs. Tradegate AG Wertpapierhandelsbank | NMI Holdings vs. JSC Halyk bank | NMI Holdings vs. VARIOUS EATERIES LS |
| Sandfire Resources vs. Tsingtao Brewery | Sandfire Resources vs. Sixt Leasing SE | Sandfire Resources vs. LANDSEA HOMES P | Sandfire Resources vs. Lendlease Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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