Correlation Between NMI Holdings and Starbucks
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Starbucks 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 Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Starbucks, you can compare the effects of market volatilities on NMI Holdings and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Starbucks.
Diversification Opportunities for NMI Holdings and Starbucks
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Starbucks is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of NMI Holdings i.e., NMI Holdings and Starbucks go up and down completely randomly.
Pair Corralation between NMI Holdings and Starbucks
Assuming the 90 days horizon NMI Holdings is expected to generate 3.02 times less return on investment than Starbucks. In addition to that, NMI Holdings is 1.55 times more volatile than Starbucks. It trades about 0.05 of its total potential returns per unit of risk. Starbucks is currently generating about 0.21 per unit of volatility. If you would invest 9,093 in Starbucks on August 28, 2024 and sell it today you would earn a total of 607.00 from holding Starbucks or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Starbucks
Performance |
| Timeline |
| NMI Holdings |
| Starbucks |
NMI Holdings and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Starbucks
The main advantage of trading using opposite NMI Holdings and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| NMI Holdings vs. Lion Biotechnologies | NMI Holdings vs. Digilife Technologies Limited | NMI Holdings vs. Food Life Companies | NMI Holdings vs. CONAGRA FOODS |
| Starbucks vs. Superior Plus Corp | Starbucks vs. NMI Holdings | Starbucks vs. Origin Agritech | Starbucks vs. SIVERS SEMICONDUCTORS AB |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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