Correlation Between NMI Holdings and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Veolia Environnement 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 Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Veolia Environnement SA, you can compare the effects of market volatilities on NMI Holdings and Veolia Environnement 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 Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Veolia Environnement.
Diversification Opportunities for NMI Holdings and Veolia Environnement
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMI and Veolia is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement 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 Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of NMI Holdings i.e., NMI Holdings and Veolia Environnement go up and down completely randomly.
Pair Corralation between NMI Holdings and Veolia Environnement
Assuming the 90 days horizon NMI Holdings is expected to generate 1.1 times more return on investment than Veolia Environnement. However, NMI Holdings is 1.1 times more volatile than Veolia Environnement SA. It trades about 0.11 of its potential returns per unit of risk. Veolia Environnement SA is currently generating about -0.06 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 Together |
| Strength | Very Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
NMI Holdings vs. Veolia Environnement SA
Performance |
| Timeline |
| NMI Holdings |
| Veolia Environnement |
NMI Holdings and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Veolia Environnement
The main advantage of trading using opposite NMI Holdings and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement'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 |
| Veolia Environnement vs. GFL ENVIRONM | Veolia Environnement vs. Superior Plus Corp | Veolia Environnement vs. NMI Holdings | Veolia Environnement 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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