Correlation Between NMI Holdings and Shimano
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Shimano 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 Shimano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Shimano, you can compare the effects of market volatilities on NMI Holdings and Shimano 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 Shimano. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Shimano.
Diversification Opportunities for NMI Holdings and Shimano
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and Shimano is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Shimano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano 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 Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano has no effect on the direction of NMI Holdings i.e., NMI Holdings and Shimano go up and down completely randomly.
Pair Corralation between NMI Holdings and Shimano
Assuming the 90 days horizon NMI Holdings is expected to generate 1.0 times more return on investment than Shimano. However, NMI Holdings is 1.0 times less risky than Shimano. It trades about 0.27 of its potential returns per unit of risk. Shimano is currently generating about -0.04 per unit of risk. If you would invest 3,360 in NMI Holdings on September 5, 2024 and sell it today you would earn a total of 420.00 from holding NMI Holdings or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Shimano
Performance |
| Timeline |
| NMI Holdings |
| Shimano |
NMI Holdings and Shimano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Shimano
The main advantage of trading using opposite NMI Holdings and Shimano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Shimano 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 Shimano will offset losses from the drop in Shimano's long position.| NMI Holdings vs. HYATT HOTELS A | NMI Holdings vs. Pebblebrook Hotel Trust | NMI Holdings vs. Penta Ocean Construction Co | NMI Holdings vs. Dalata Hotel Group |
| Shimano vs. Li Ning Company | Shimano vs. SHIMANO INC UNSPADR10 | Shimano vs. Superior Plus Corp | Shimano vs. NMI Holdings |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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