Correlation Between NMI Holdings and ENN Energy
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and ENN Energy 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 ENN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and ENN Energy Holdings, you can compare the effects of market volatilities on NMI Holdings and ENN Energy 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 ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and ENN Energy.
Diversification Opportunities for NMI Holdings and ENN Energy
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and ENN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings 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 ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of NMI Holdings i.e., NMI Holdings and ENN Energy go up and down completely randomly.
Pair Corralation between NMI Holdings and ENN Energy
Assuming the 90 days horizon NMI Holdings is expected to generate 0.85 times more return on investment than ENN Energy. However, NMI Holdings is 1.18 times less risky than ENN Energy. It trades about 0.27 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about -0.03 per unit of risk. If you would invest 3,360 in NMI Holdings on September 3, 2024 and sell it today you would earn a total of 400.00 from holding NMI Holdings or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. ENN Energy Holdings
Performance |
| Timeline |
| NMI Holdings |
| ENN Energy Holdings |
NMI Holdings and ENN Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and ENN Energy
The main advantage of trading using opposite NMI Holdings and ENN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, ENN Energy 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 ENN Energy will offset losses from the drop in ENN Energy's long position.| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
| ENN Energy vs. TAL Education Group | ENN Energy vs. STRAYER EDUCATION | ENN Energy vs. Diamyd Medical AB | ENN Energy vs. Laureate Education |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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