Correlation Between CARDINAL HEALTH and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH 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 CARDINAL HEALTH and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARDINAL HEALTH and NMI Holdings, you can compare the effects of market volatilities on CARDINAL HEALTH 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 CARDINAL HEALTH with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and NMI Holdings.
Diversification Opportunities for CARDINAL HEALTH and NMI Holdings
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CARDINAL and NMI is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and CARDINAL HEALTH 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 CARDINAL HEALTH 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 CARDINAL HEALTH i.e., CARDINAL HEALTH and NMI Holdings go up and down completely randomly.
Pair Corralation between CARDINAL HEALTH and NMI Holdings
Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.77 times more return on investment than NMI Holdings. However, CARDINAL HEALTH is 1.3 times less risky than NMI Holdings. It trades about 0.17 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.06 per unit of risk. If you would invest 9,049 in CARDINAL HEALTH on October 30, 2024 and sell it today you would earn a total of 3,196 from holding CARDINAL HEALTH or generate 35.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARDINAL HEALTH vs. NMI Holdings
Performance |
| Timeline |
| CARDINAL HEALTH |
| NMI Holdings |
CARDINAL HEALTH and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARDINAL HEALTH and NMI Holdings
The main advantage of trading using opposite CARDINAL HEALTH and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARDINAL HEALTH 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.| CARDINAL HEALTH vs. Tower Semiconductor | CARDINAL HEALTH vs. Soken Chemical Engineering | CARDINAL HEALTH vs. China BlueChemical | CARDINAL HEALTH vs. Nordic Semiconductor ASA |
| NMI Holdings vs. GREENX METALS LTD | NMI Holdings vs. Perseus Mining Limited | NMI Holdings vs. Fortescue Metals Group | NMI Holdings vs. ARDAGH METAL PACDL 0001 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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