Correlation Between AXIS Capital and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both AXIS Capital 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 AXIS Capital and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXIS Capital Holdings and NMI Holdings, you can compare the effects of market volatilities on AXIS Capital 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 AXIS Capital with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXIS Capital and NMI Holdings.
Diversification Opportunities for AXIS Capital and NMI Holdings
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AXIS and NMI is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and AXIS Capital 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 AXIS Capital 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 AXIS Capital i.e., AXIS Capital and NMI Holdings go up and down completely randomly.
Pair Corralation between AXIS Capital and NMI Holdings
Considering the 90-day investment horizon AXIS Capital is expected to generate 1.05 times less return on investment than NMI Holdings. But when comparing it to its historical volatility, AXIS Capital Holdings is 1.06 times less risky than NMI Holdings. It trades about 0.1 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 2,232 in NMI Holdings on August 24, 2024 and sell it today you would earn a total of 1,641 from holding NMI Holdings or generate 73.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXIS Capital Holdings vs. NMI Holdings
Performance |
| Timeline |
| AXIS Capital Holdings |
| NMI Holdings |
AXIS Capital and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXIS Capital and NMI Holdings
The main advantage of trading using opposite AXIS Capital and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXIS Capital 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.| AXIS Capital vs. Assured Guaranty | AXIS Capital vs. Enact Holdings | AXIS Capital vs. NMI Holdings | AXIS Capital vs. Radian Group |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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