Correlation Between EBay and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both EBay 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 EBay and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eBay Inc and NMI Holdings, you can compare the effects of market volatilities on EBay 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 EBay with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and NMI Holdings.
Diversification Opportunities for EBay and NMI Holdings
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EBay and NMI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding eBay Inc and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and EBay 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 eBay Inc 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 EBay i.e., EBay and NMI Holdings go up and down completely randomly.
Pair Corralation between EBay and NMI Holdings
Assuming the 90 days horizon eBay Inc is expected to generate 1.11 times more return on investment than NMI Holdings. However, EBay is 1.11 times more volatile than NMI Holdings. It trades about -0.01 of its potential returns per unit of risk. NMI Holdings is currently generating about -0.04 per unit of risk. If you would invest 5,863 in eBay Inc on August 24, 2024 and sell it today you would lose (87.00) from holding eBay Inc or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
eBay Inc vs. NMI Holdings
Performance |
| Timeline |
| eBay Inc |
| NMI Holdings |
EBay and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBay and NMI Holdings
The main advantage of trading using opposite EBay and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBay 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.| EBay vs. Universal Insurance Holdings | EBay vs. Selective Insurance Group | EBay vs. Reinsurance Group of | EBay vs. Information Services International Dentsu |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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