Correlation Between Morgan Stanley and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley 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 Morgan Stanley and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and NMI Holdings, you can compare the effects of market volatilities on Morgan Stanley 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 Morgan Stanley with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and NMI Holdings.
Diversification Opportunities for Morgan Stanley and NMI Holdings
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Morgan and NMI is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley i.e., Morgan Stanley and NMI Holdings go up and down completely randomly.
Pair Corralation between Morgan Stanley and NMI Holdings
Assuming the 90 days trading horizon Morgan Stanley is expected to generate 1.14 times less return on investment than NMI Holdings. In addition to that, Morgan Stanley is 1.11 times more volatile than NMI Holdings. It trades about 0.07 of its total potential returns per unit of risk. NMI Holdings is currently generating about 0.09 per unit of volatility. If you would invest 1,900 in NMI Holdings on September 3, 2024 and sell it today you would earn a total of 1,860 from holding NMI Holdings or generate 97.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 61.19% |
| Values | Daily Returns |
Morgan Stanley vs. NMI Holdings
Performance |
| Timeline |
| Morgan Stanley |
| NMI Holdings |
Morgan Stanley and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and NMI Holdings
The main advantage of trading using opposite Morgan Stanley and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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.| Morgan Stanley vs. American Homes 4 | Morgan Stanley vs. Haverty Furniture Companies | Morgan Stanley vs. LANDSEA HOMES P | Morgan Stanley vs. Public Storage |
| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |