Correlation Between NMI Holdings and AS Latvijas
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and AS Latvijas 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 AS Latvijas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and AS Latvijas balzams, you can compare the effects of market volatilities on NMI Holdings and AS Latvijas 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 AS Latvijas. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and AS Latvijas.
Diversification Opportunities for NMI Holdings and AS Latvijas
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and UM9 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and AS Latvijas balzams in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AS Latvijas balzams 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 AS Latvijas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AS Latvijas balzams has no effect on the direction of NMI Holdings i.e., NMI Holdings and AS Latvijas go up and down completely randomly.
Pair Corralation between NMI Holdings and AS Latvijas
Assuming the 90 days horizon NMI Holdings is expected to generate 5.79 times more return on investment than AS Latvijas. However, NMI Holdings is 5.79 times more volatile than AS Latvijas balzams. It trades about 0.27 of its potential returns per unit of risk. AS Latvijas balzams is currently generating about 0.22 per unit of risk. If you would invest 3,360 in NMI Holdings on September 4, 2024 and sell it today you would earn a total of 400.00 from holding NMI Holdings or generate 11.9% 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. AS Latvijas balzams
Performance |
| Timeline |
| NMI Holdings |
| AS Latvijas balzams |
NMI Holdings and AS Latvijas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and AS Latvijas
The main advantage of trading using opposite NMI Holdings and AS Latvijas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, AS Latvijas 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 AS Latvijas will offset losses from the drop in AS Latvijas' long position.| NMI Holdings vs. HYDROFARM HLD GRP | NMI Holdings vs. VIAPLAY GROUP AB | NMI Holdings vs. Titan Machinery | NMI Holdings vs. SCANSOURCE |
| AS Latvijas vs. VIRGIN WINES UK | AS Latvijas vs. Superior Plus Corp | AS Latvijas vs. NMI Holdings | AS Latvijas vs. Origin Agritech |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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