Correlation Between NMI Holdings and VOLKSWAGEN
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and VOLKSWAGEN 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 VOLKSWAGEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and VOLKSWAGEN AG VZ, you can compare the effects of market volatilities on NMI Holdings and VOLKSWAGEN 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 VOLKSWAGEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and VOLKSWAGEN.
Diversification Opportunities for NMI Holdings and VOLKSWAGEN
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and VOLKSWAGEN is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and VOLKSWAGEN AG VZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOLKSWAGEN AG VZ 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 VOLKSWAGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOLKSWAGEN AG VZ has no effect on the direction of NMI Holdings i.e., NMI Holdings and VOLKSWAGEN go up and down completely randomly.
Pair Corralation between NMI Holdings and VOLKSWAGEN
Assuming the 90 days horizon NMI Holdings is expected to generate 1.44 times more return on investment than VOLKSWAGEN. However, NMI Holdings is 1.44 times more volatile than VOLKSWAGEN AG VZ. It trades about 0.05 of its potential returns per unit of risk. VOLKSWAGEN AG VZ is currently generating about -0.32 per unit of risk. If you would invest 3,580 in NMI Holdings on August 28, 2024 and sell it today you would earn a total of 60.00 from holding NMI Holdings or generate 1.68% 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. VOLKSWAGEN AG VZ
Performance |
| Timeline |
| NMI Holdings |
| VOLKSWAGEN AG VZ |
NMI Holdings and VOLKSWAGEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and VOLKSWAGEN
The main advantage of trading using opposite NMI Holdings and VOLKSWAGEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, VOLKSWAGEN 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 VOLKSWAGEN will offset losses from the drop in VOLKSWAGEN's long position.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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