Correlation Between Enact Holdings and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Enact Holdings 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 Enact Holdings and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enact Holdings and NMI Holdings, you can compare the effects of market volatilities on Enact Holdings 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 Enact Holdings with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enact Holdings and NMI Holdings.
Diversification Opportunities for Enact Holdings and NMI Holdings
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enact and NMI is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Enact Holdings and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Enact 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 Enact Holdings 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 Enact Holdings i.e., Enact Holdings and NMI Holdings go up and down completely randomly.
Pair Corralation between Enact Holdings and NMI Holdings
Considering the 90-day investment horizon Enact Holdings is expected to generate 1.3 times less return on investment than NMI Holdings. But when comparing it to its historical volatility, Enact Holdings is 1.24 times less risky than NMI Holdings. It trades about 0.09 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,243 in NMI Holdings on August 24, 2024 and sell it today you would earn a total of 584.00 from holding NMI Holdings or generate 18.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enact Holdings vs. NMI Holdings
Performance |
| Timeline |
| Enact Holdings |
| NMI Holdings |
Enact Holdings and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enact Holdings and NMI Holdings
The main advantage of trading using opposite Enact Holdings and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enact Holdings 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.| Enact Holdings vs. Assured Guaranty | Enact Holdings vs. AMERISAFE | Enact Holdings vs. MBIA Inc | Enact Holdings vs. ICC Holdings |
| NMI Holdings vs. MGIC Investment Corp | NMI Holdings vs. Employers Holdings | NMI Holdings vs. James River Group | NMI Holdings vs. ICC Holdings |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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