Correlation Between NMI Holdings and Talanx AG
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Talanx AG 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 Talanx AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Talanx AG, you can compare the effects of market volatilities on NMI Holdings and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Talanx AG.
Diversification Opportunities for NMI Holdings and Talanx AG
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMI and Talanx is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of NMI Holdings i.e., NMI Holdings and Talanx AG go up and down completely randomly.
Pair Corralation between NMI Holdings and Talanx AG
Assuming the 90 days horizon NMI Holdings is expected to generate 4.48 times less return on investment than Talanx AG. In addition to that, NMI Holdings is 1.76 times more volatile than Talanx AG. It trades about 0.05 of its total potential returns per unit of risk. Talanx AG is currently generating about 0.36 per unit of volatility. If you would invest 7,140 in Talanx AG on August 28, 2024 and sell it today you would earn a total of 730.00 from holding Talanx AG or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Talanx AG
Performance |
| Timeline |
| NMI Holdings |
| Talanx AG |
NMI Holdings and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Talanx AG
The main advantage of trading using opposite NMI Holdings and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG'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 |
| Talanx AG vs. NIPPON STEEL SPADR | Talanx AG vs. Insteel Industries | Talanx AG vs. Zijin Mining Group | Talanx AG vs. COSMOSTEEL HLDGS |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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