Correlation Between NMI Holdings and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Selective Insurance 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 Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Selective Insurance Group, you can compare the effects of market volatilities on NMI Holdings and Selective Insurance 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 Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Selective Insurance.
Diversification Opportunities for NMI Holdings and Selective Insurance
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and Selective is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance 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 Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of NMI Holdings i.e., NMI Holdings and Selective Insurance go up and down completely randomly.
Pair Corralation between NMI Holdings and Selective Insurance
Assuming the 90 days horizon NMI Holdings is expected to generate 0.95 times more return on investment than Selective Insurance. However, NMI Holdings is 1.06 times less risky than Selective Insurance. It trades about 0.09 of its potential returns per unit of risk. Selective Insurance Group is currently generating about 0.01 per unit of risk. If you would invest 1,860 in NMI Holdings on August 28, 2024 and sell it today you would earn a total of 1,780 from holding NMI Holdings or generate 95.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Selective Insurance Group
Performance |
| Timeline |
| NMI Holdings |
| Selective Insurance |
NMI Holdings and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Selective Insurance
The main advantage of trading using opposite NMI Holdings and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Selective Insurance 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 Selective Insurance will offset losses from the drop in Selective Insurance's long position.| NMI Holdings vs. Lion Biotechnologies | NMI Holdings vs. Digilife Technologies Limited | NMI Holdings vs. Food Life Companies | NMI Holdings vs. CONAGRA FOODS |
| Selective Insurance vs. Haier Smart Home | Selective Insurance vs. Strategic Education | Selective Insurance vs. American Public Education | Selective Insurance vs. Japan Tobacco |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Commodity Directory Find actively traded commodities issued by global exchanges |