Correlation Between NMI Holdings and Vivendi SE
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Vivendi SE 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 Vivendi SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Vivendi SE, you can compare the effects of market volatilities on NMI Holdings and Vivendi SE 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 Vivendi SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Vivendi SE.
Diversification Opportunities for NMI Holdings and Vivendi SE
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Vivendi is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Vivendi SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SE 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 Vivendi SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivendi SE has no effect on the direction of NMI Holdings i.e., NMI Holdings and Vivendi SE go up and down completely randomly.
Pair Corralation between NMI Holdings and Vivendi SE
Assuming the 90 days horizon NMI Holdings is expected to generate 1.57 times more return on investment than Vivendi SE. However, NMI Holdings is 1.57 times more volatile than Vivendi SE. It trades about 0.13 of its potential returns per unit of risk. Vivendi SE is currently generating about -0.39 per unit of risk. If you would invest 3,580 in NMI Holdings on August 31, 2024 and sell it today you would earn a total of 220.00 from holding NMI Holdings or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
NMI Holdings vs. Vivendi SE
Performance |
| Timeline |
| NMI Holdings |
| Vivendi SE |
NMI Holdings and Vivendi SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Vivendi SE
The main advantage of trading using opposite NMI Holdings and Vivendi SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Vivendi SE 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 Vivendi SE will offset losses from the drop in Vivendi SE'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 |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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