Correlation Between RCS MediaGroup and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup 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 RCS MediaGroup and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCS MediaGroup SpA and NMI Holdings, you can compare the effects of market volatilities on RCS MediaGroup 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 RCS MediaGroup with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and NMI Holdings.
Diversification Opportunities for RCS MediaGroup and NMI Holdings
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RCS and NMI is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and RCS MediaGroup 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 RCS MediaGroup SpA 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 RCS MediaGroup i.e., RCS MediaGroup and NMI Holdings go up and down completely randomly.
Pair Corralation between RCS MediaGroup and NMI Holdings
Assuming the 90 days trading horizon RCS MediaGroup SpA is expected to generate 0.57 times more return on investment than NMI Holdings. However, RCS MediaGroup SpA is 1.77 times less risky than NMI Holdings. It trades about 0.44 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.04 per unit of risk. If you would invest 76.00 in RCS MediaGroup SpA on August 29, 2024 and sell it today you would earn a total of 10.00 from holding RCS MediaGroup SpA or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCS MediaGroup SpA vs. NMI Holdings
Performance |
| Timeline |
| RCS MediaGroup SpA |
| NMI Holdings |
RCS MediaGroup and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCS MediaGroup and NMI Holdings
The main advantage of trading using opposite RCS MediaGroup and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup 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.| RCS MediaGroup vs. Superior Plus Corp | RCS MediaGroup vs. NMI Holdings | RCS MediaGroup vs. Origin Agritech | RCS MediaGroup vs. SIVERS SEMICONDUCTORS AB |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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