Correlation Between Liberty Broadband and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and NMI Holdings 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 Liberty Broadband and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and NMI Holdings, you can compare the effects of market volatilities on Liberty Broadband and NMI Holdings 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 Liberty Broadband with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and NMI Holdings.
Diversification Opportunities for Liberty Broadband and NMI Holdings
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Liberty and NMI is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Liberty Broadband 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 Liberty Broadband are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and NMI Holdings go up and down completely randomly.
Pair Corralation between Liberty Broadband and NMI Holdings
Assuming the 90 days horizon Liberty Broadband is expected to under-perform the NMI Holdings. In addition to that, Liberty Broadband is 1.25 times more volatile than NMI Holdings. It trades about -0.03 of its total potential returns per unit of risk. NMI Holdings is currently generating about 0.16 per unit of volatility. If you would invest 3,520 in NMI Holdings on November 3, 2024 and sell it today you would earn a total of 220.00 from holding NMI Holdings or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband vs. NMI Holdings
Performance |
| Timeline |
| Liberty Broadband |
| NMI Holdings |
Liberty Broadband and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and NMI Holdings
The main advantage of trading using opposite Liberty Broadband and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| Liberty Broadband vs. Gaztransport Technigaz SA | Liberty Broadband vs. SOEDER SPORTFISKE AB | Liberty Broadband vs. PARKEN Sport Entertainment | Liberty Broadband vs. MICRONIC MYDATA |
| NMI Holdings vs. DFS Furniture PLC | NMI Holdings vs. CITY OFFICE REIT | NMI Holdings vs. COMPUTERSHARE | NMI Holdings vs. NorAm Drilling AS |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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