Correlation Between Compagnie and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Compagnie 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 Compagnie and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie de Saint Gobain and NMI Holdings, you can compare the effects of market volatilities on Compagnie 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 Compagnie with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and NMI Holdings.
Diversification Opportunities for Compagnie and NMI Holdings
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compagnie and NMI is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Compagnie 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 Compagnie de Saint Gobain 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 Compagnie i.e., Compagnie and NMI Holdings go up and down completely randomly.
Pair Corralation between Compagnie and NMI Holdings
Assuming the 90 days horizon Compagnie de Saint Gobain is expected to generate 0.63 times more return on investment than NMI Holdings. However, Compagnie de Saint Gobain is 1.59 times less risky than NMI Holdings. It trades about 0.15 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.07 per unit of risk. If you would invest 8,328 in Compagnie de Saint Gobain on August 29, 2024 and sell it today you would earn a total of 394.00 from holding Compagnie de Saint Gobain or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. NMI Holdings
Performance |
| Timeline |
| Compagnie de Saint |
| NMI Holdings |
Compagnie and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and NMI Holdings
The main advantage of trading using opposite Compagnie and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie 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.| Compagnie vs. National Bank Holdings | Compagnie vs. SOFTBANK P ADR | Compagnie vs. Iridium Communications | Compagnie vs. GRIFFIN MINING LTD |
| NMI Holdings vs. Boyd Gaming | NMI Holdings vs. SEI INVESTMENTS | NMI Holdings vs. HK Electric Investments | NMI Holdings vs. WisdomTree Investments |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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