Correlation Between NMI Holdings and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Telecom Argentina 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 Telecom Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Telecom Argentina SA, you can compare the effects of market volatilities on NMI Holdings and Telecom Argentina 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 Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Telecom Argentina.
Diversification Opportunities for NMI Holdings and Telecom Argentina
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NMI and Telecom is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina 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 Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of NMI Holdings i.e., NMI Holdings and Telecom Argentina go up and down completely randomly.
Pair Corralation between NMI Holdings and Telecom Argentina
Assuming the 90 days horizon NMI Holdings is expected to generate 0.51 times more return on investment than Telecom Argentina. However, NMI Holdings is 1.96 times less risky than Telecom Argentina. It trades about 0.05 of its potential returns per unit of risk. Telecom Argentina SA is currently generating about -0.14 per unit of risk. If you would invest 3,560 in NMI Holdings on October 25, 2024 and sell it today you would earn a total of 40.00 from holding NMI Holdings or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Telecom Argentina SA
Performance |
| Timeline |
| NMI Holdings |
| Telecom Argentina |
NMI Holdings and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Telecom Argentina
The main advantage of trading using opposite NMI Holdings and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Telecom Argentina 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 Telecom Argentina will offset losses from the drop in Telecom Argentina's long position.| NMI Holdings vs. FAST RETAIL ADR | NMI Holdings vs. FIRST SAVINGS FINL | NMI Holdings vs. MGIC INVESTMENT | NMI Holdings vs. Ross Stores |
| Telecom Argentina vs. Agilent Technologies | Telecom Argentina vs. SIERRA METALS | Telecom Argentina vs. UNIVERSAL MUSIC GROUP | Telecom Argentina vs. DAIDO METAL TD |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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