Correlation Between NMI Holdings and Snam SpA
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Snam SpA 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 Snam SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Snam SpA, you can compare the effects of market volatilities on NMI Holdings and Snam SpA 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 Snam SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Snam SpA.
Diversification Opportunities for NMI Holdings and Snam SpA
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Snam is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Snam SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snam SpA 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 Snam SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snam SpA has no effect on the direction of NMI Holdings i.e., NMI Holdings and Snam SpA go up and down completely randomly.
Pair Corralation between NMI Holdings and Snam SpA
Assuming the 90 days horizon NMI Holdings is expected to generate 2.31 times more return on investment than Snam SpA. However, NMI Holdings is 2.31 times more volatile than Snam SpA. It trades about -0.05 of its potential returns per unit of risk. Snam SpA is currently generating about -0.2 per unit of risk. If you would invest 3,660 in NMI Holdings on August 25, 2024 and sell it today you would lose (120.00) from holding NMI Holdings or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Snam SpA
Performance |
| Timeline |
| NMI Holdings |
| Snam SpA |
NMI Holdings and Snam SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Snam SpA
The main advantage of trading using opposite NMI Holdings and Snam SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Snam SpA 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 Snam SpA will offset losses from the drop in Snam SpA'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 |
| Snam SpA vs. Meli Hotels International | Snam SpA vs. Dalata Hotel Group | Snam SpA vs. INTERCONT HOTELS | Snam SpA vs. TRADEDOUBLER AB SK |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |