Correlation Between NMI Holdings and TESCO PLC
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and TESCO PLC 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 TESCO PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and TESCO PLC LS 0633333, you can compare the effects of market volatilities on NMI Holdings and TESCO PLC 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 TESCO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and TESCO PLC.
Diversification Opportunities for NMI Holdings and TESCO PLC
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and TESCO is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and TESCO PLC LS 0633333 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TESCO PLC LS 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 TESCO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TESCO PLC LS has no effect on the direction of NMI Holdings i.e., NMI Holdings and TESCO PLC go up and down completely randomly.
Pair Corralation between NMI Holdings and TESCO PLC
Assuming the 90 days horizon NMI Holdings is expected to generate 1.54 times more return on investment than TESCO PLC. However, NMI Holdings is 1.54 times more volatile than TESCO PLC LS 0633333. It trades about 0.11 of its potential returns per unit of risk. TESCO PLC LS 0633333 is currently generating about 0.17 per unit of risk. If you would invest 3,580 in NMI Holdings on September 1, 2024 and sell it today you would earn a total of 200.00 from holding NMI Holdings or generate 5.59% 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. TESCO PLC LS 0633333
Performance |
| Timeline |
| NMI Holdings |
| TESCO PLC LS |
NMI Holdings and TESCO PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and TESCO PLC
The main advantage of trading using opposite NMI Holdings and TESCO PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, TESCO PLC 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 TESCO PLC will offset losses from the drop in TESCO PLC's long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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