Correlation Between Ipsen SA and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Ipsen SA 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 Ipsen SA and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ipsen SA and NMI Holdings, you can compare the effects of market volatilities on Ipsen SA 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 Ipsen SA with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ipsen SA and NMI Holdings.
Diversification Opportunities for Ipsen SA and NMI Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ipsen and NMI is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ipsen SA and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Ipsen SA 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 Ipsen SA 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 Ipsen SA i.e., Ipsen SA and NMI Holdings go up and down completely randomly.
Pair Corralation between Ipsen SA and NMI Holdings
Assuming the 90 days horizon Ipsen SA is expected to generate 8.53 times less return on investment than NMI Holdings. But when comparing it to its historical volatility, Ipsen SA is 1.04 times less risky than NMI Holdings. It trades about 0.01 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,940 in NMI Holdings on August 26, 2024 and sell it today you would earn a total of 1,640 from holding NMI Holdings or generate 84.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ipsen SA vs. NMI Holdings
Performance |
| Timeline |
| Ipsen SA |
| NMI Holdings |
Ipsen SA and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ipsen SA and NMI Holdings
The main advantage of trading using opposite Ipsen SA and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ipsen SA 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.| Ipsen SA vs. Electronic Arts | Ipsen SA vs. Renesas Electronics | Ipsen SA vs. Salesforce | Ipsen SA vs. BOS BETTER ONLINE |
| NMI Holdings vs. USWE SPORTS AB | NMI Holdings vs. GungHo Online Entertainment | NMI Holdings vs. Ming Le Sports | NMI Holdings vs. DICKS Sporting Goods |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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