Correlation Between NMI Holdings and SUMITOMO P
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and SUMITOMO P 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 SUMITOMO P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and SUMITOMO P SP, you can compare the effects of market volatilities on NMI Holdings and SUMITOMO P 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 SUMITOMO P. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and SUMITOMO P.
Diversification Opportunities for NMI Holdings and SUMITOMO P
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and SUMITOMO is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and SUMITOMO P SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMITOMO P SP 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 SUMITOMO P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMITOMO P SP has no effect on the direction of NMI Holdings i.e., NMI Holdings and SUMITOMO P go up and down completely randomly.
Pair Corralation between NMI Holdings and SUMITOMO P
Assuming the 90 days horizon NMI Holdings is expected to generate 1.57 times less return on investment than SUMITOMO P. In addition to that, NMI Holdings is 1.36 times more volatile than SUMITOMO P SP. It trades about 0.04 of its total potential returns per unit of risk. SUMITOMO P SP is currently generating about 0.09 per unit of volatility. If you would invest 1,930 in SUMITOMO P SP on August 28, 2024 and sell it today you would earn a total of 60.00 from holding SUMITOMO P SP or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NMI Holdings vs. SUMITOMO P SP
Performance |
| Timeline |
| NMI Holdings |
| SUMITOMO P SP |
NMI Holdings and SUMITOMO P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and SUMITOMO P
The main advantage of trading using opposite NMI Holdings and SUMITOMO P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, SUMITOMO P 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 SUMITOMO P will offset losses from the drop in SUMITOMO P's long position.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
| SUMITOMO P vs. Superior Plus Corp | SUMITOMO P vs. NMI Holdings | SUMITOMO P vs. Origin Agritech | SUMITOMO P 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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