Correlation Between NMI Holdings and TreeHouse Foods
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and TreeHouse Foods 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 TreeHouse Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and TreeHouse Foods, you can compare the effects of market volatilities on NMI Holdings and TreeHouse Foods 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 TreeHouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and TreeHouse Foods.
Diversification Opportunities for NMI Holdings and TreeHouse Foods
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and TreeHouse is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and TreeHouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TreeHouse Foods 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 TreeHouse Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TreeHouse Foods has no effect on the direction of NMI Holdings i.e., NMI Holdings and TreeHouse Foods go up and down completely randomly.
Pair Corralation between NMI Holdings and TreeHouse Foods
Assuming the 90 days horizon NMI Holdings is expected to generate 0.57 times more return on investment than TreeHouse Foods. However, NMI Holdings is 1.76 times less risky than TreeHouse Foods. It trades about 0.04 of its potential returns per unit of risk. TreeHouse Foods is currently generating about -0.02 per unit of risk. If you would invest 3,580 in NMI Holdings on August 29, 2024 and sell it today you would earn a total of 60.00 from holding NMI Holdings or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. TreeHouse Foods
Performance |
| Timeline |
| NMI Holdings |
| TreeHouse Foods |
NMI Holdings and TreeHouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and TreeHouse Foods
The main advantage of trading using opposite NMI Holdings and TreeHouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, TreeHouse Foods 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 TreeHouse Foods will offset losses from the drop in TreeHouse Foods' 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 |
| TreeHouse Foods vs. Superior Plus Corp | TreeHouse Foods vs. NMI Holdings | TreeHouse Foods vs. Origin Agritech | TreeHouse Foods 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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