Correlation Between NMI Holdings and Waste Management
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Waste Management 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Waste Management, you can compare the effects of market volatilities on NMI Holdings and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Waste Management.
Diversification Opportunities for NMI Holdings and Waste Management
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Waste is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of NMI Holdings i.e., NMI Holdings and Waste Management go up and down completely randomly.
Pair Corralation between NMI Holdings and Waste Management
Assuming the 90 days horizon NMI Holdings is expected to generate 1.14 times more return on investment than Waste Management. However, NMI Holdings is 1.14 times more volatile than Waste Management. It trades about 0.11 of its potential returns per unit of risk. Waste Management is currently generating about 0.1 per unit of risk. If you would invest 3,060 in NMI Holdings on August 31, 2024 and sell it today you would earn a total of 720.00 from holding NMI Holdings or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
NMI Holdings vs. Waste Management
Performance |
| Timeline |
| NMI Holdings |
| Waste Management |
NMI Holdings and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Waste Management
The main advantage of trading using opposite NMI Holdings and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| NMI Holdings vs. Iridium Communications | NMI Holdings vs. BOS BETTER ONLINE | NMI Holdings vs. Verizon Communications | NMI Holdings vs. Singapore Telecommunications Limited |
| Waste Management vs. Veolia Environnement SA | Waste Management vs. GFL ENVIRONM | Waste Management vs. Superior Plus Corp | Waste Management vs. NMI Holdings |
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 Stocks Directory module to find actively traded stocks across global markets.
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