Correlation Between Equinix and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Equinix 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 Equinix and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinix and NMI Holdings, you can compare the effects of market volatilities on Equinix 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 Equinix with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinix and NMI Holdings.
Diversification Opportunities for Equinix and NMI Holdings
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Equinix and NMI is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Equinix 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 Equinix 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 Equinix i.e., Equinix and NMI Holdings go up and down completely randomly.
Pair Corralation between Equinix and NMI Holdings
Assuming the 90 days trading horizon Equinix is expected to generate 0.77 times more return on investment than NMI Holdings. However, Equinix is 1.3 times less risky than NMI Holdings. It trades about 0.21 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.04 per unit of risk. If you would invest 78,029 in Equinix on September 12, 2024 and sell it today you would earn a total of 14,891 from holding Equinix or generate 19.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinix vs. NMI Holdings
Performance |
| Timeline |
| Equinix |
| NMI Holdings |
Equinix and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinix and NMI Holdings
The main advantage of trading using opposite Equinix and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinix 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.| Equinix vs. GigaMedia | Equinix vs. TOWNSQUARE MEDIA INC | Equinix vs. Q2M Managementberatung AG | Equinix vs. LANDSEA GREEN MANAGEMENT |
| NMI Holdings vs. Nufarm Limited | NMI Holdings vs. AVITA Medical | NMI Holdings vs. Sterling Construction | NMI Holdings vs. Avanos Medical |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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