Correlation Between Aristocrat Leisure and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure 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 Aristocrat Leisure and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and NMI Holdings, you can compare the effects of market volatilities on Aristocrat Leisure 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 Aristocrat Leisure with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and NMI Holdings.
Diversification Opportunities for Aristocrat Leisure and NMI Holdings
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aristocrat and NMI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Aristocrat Leisure 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 Aristocrat Leisure Limited 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 Aristocrat Leisure i.e., Aristocrat Leisure and NMI Holdings go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and NMI Holdings
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to under-perform the NMI Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Aristocrat Leisure Limited is 1.38 times less risky than NMI Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The NMI Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,560 in NMI Holdings on October 28, 2024 and sell it today you would earn a total of 40.00 from holding NMI Holdings or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. NMI Holdings
Performance |
| Timeline |
| Aristocrat Leisure |
| NMI Holdings |
Aristocrat Leisure and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and NMI Holdings
The main advantage of trading using opposite Aristocrat Leisure and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure 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.| Aristocrat Leisure vs. VELA TECHNOLPLC LS 0001 | Aristocrat Leisure vs. Perdoceo Education | Aristocrat Leisure vs. PKSHA TECHNOLOGY INC | Aristocrat Leisure vs. ASPEN TECHINC DL |
| NMI Holdings vs. Gruppo Mutuionline SpA | NMI Holdings vs. Aristocrat Leisure Limited | NMI Holdings vs. GungHo Online Entertainment | NMI Holdings vs. PLAYMATES TOYS |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |