Correlation Between NMI Holdings and Schlumberger
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Schlumberger 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 Schlumberger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Schlumberger Limited, you can compare the effects of market volatilities on NMI Holdings and Schlumberger 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 Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Schlumberger.
Diversification Opportunities for NMI Holdings and Schlumberger
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and Schlumberger is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of NMI Holdings i.e., NMI Holdings and Schlumberger go up and down completely randomly.
Pair Corralation between NMI Holdings and Schlumberger
Assuming the 90 days horizon NMI Holdings is expected to generate 1.11 times less return on investment than Schlumberger. But when comparing it to its historical volatility, NMI Holdings is 1.44 times less risky than Schlumberger. It trades about 0.27 of its potential returns per unit of risk. Schlumberger Limited is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,695 in Schlumberger Limited on September 3, 2024 and sell it today you would earn a total of 475.00 from holding Schlumberger Limited or generate 12.86% 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. Schlumberger Limited
Performance |
| Timeline |
| NMI Holdings |
| Schlumberger Limited |
NMI Holdings and Schlumberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Schlumberger
The main advantage of trading using opposite NMI Holdings and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
| Schlumberger vs. VIAPLAY GROUP AB | Schlumberger vs. Summit Materials | Schlumberger vs. JD SPORTS FASH | Schlumberger vs. Rayonier Advanced Materials |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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