Correlation Between NMI Holdings and Universal Health
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Universal Health 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 Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Universal Health Realty, you can compare the effects of market volatilities on NMI Holdings and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Universal Health.
Diversification Opportunities for NMI Holdings and Universal Health
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMI and Universal is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Universal Health Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Realty 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Realty has no effect on the direction of NMI Holdings i.e., NMI Holdings and Universal Health go up and down completely randomly.
Pair Corralation between NMI Holdings and Universal Health
Assuming the 90 days horizon NMI Holdings is expected to generate 1.53 times less return on investment than Universal Health. In addition to that, NMI Holdings is 1.27 times more volatile than Universal Health Realty. It trades about 0.1 of its total potential returns per unit of risk. Universal Health Realty is currently generating about 0.2 per unit of volatility. If you would invest 3,611 in Universal Health Realty on September 1, 2024 and sell it today you would earn a total of 318.00 from holding Universal Health Realty or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NMI Holdings vs. Universal Health Realty
Performance |
| Timeline |
| NMI Holdings |
| Universal Health Realty |
NMI Holdings and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Universal Health
The main advantage of trading using opposite NMI Holdings and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| Universal Health vs. ALGOMA STEEL GROUP | Universal Health vs. NIPPON STEEL SPADR | Universal Health vs. AM EAGLE OUTFITTERS | Universal Health vs. COSMOSTEEL HLDGS |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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