Correlation Between NMI Holdings and ASPEN TECHINC
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and ASPEN TECHINC 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 ASPEN TECHINC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and ASPEN TECHINC DL, you can compare the effects of market volatilities on NMI Holdings and ASPEN TECHINC 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 ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and ASPEN TECHINC.
Diversification Opportunities for NMI Holdings and ASPEN TECHINC
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and ASPEN is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL 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 ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of NMI Holdings i.e., NMI Holdings and ASPEN TECHINC go up and down completely randomly.
Pair Corralation between NMI Holdings and ASPEN TECHINC
Assuming the 90 days horizon NMI Holdings is expected to generate 1.19 times more return on investment than ASPEN TECHINC. However, NMI Holdings is 1.19 times more volatile than ASPEN TECHINC DL. It trades about 0.13 of its potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.13 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. ASPEN TECHINC DL
Performance |
| Timeline |
| NMI Holdings |
| ASPEN TECHINC DL |
NMI Holdings and ASPEN TECHINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and ASPEN TECHINC
The main advantage of trading using opposite NMI Holdings and ASPEN TECHINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, ASPEN TECHINC 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 ASPEN TECHINC will offset losses from the drop in ASPEN TECHINC'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 |
| ASPEN TECHINC vs. Haverty Furniture Companies | ASPEN TECHINC vs. LPKF Laser Electronics | ASPEN TECHINC vs. EIDESVIK OFFSHORE NK | ASPEN TECHINC vs. American Homes 4 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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