Correlation Between International Business and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and NMI Holdings, you can compare the effects of market volatilities on International Business 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 International Business with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and NMI Holdings.
Diversification Opportunities for International Business and NMI Holdings
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between International and NMI is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and International Business 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 International Business Machines 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 International Business i.e., International Business and NMI Holdings go up and down completely randomly.
Pair Corralation between International Business and NMI Holdings
Assuming the 90 days horizon International Business Machines is expected to generate 0.94 times more return on investment than NMI Holdings. However, International Business Machines is 1.06 times less risky than NMI Holdings. It trades about 0.11 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.03 per unit of risk. If you would invest 19,953 in International Business Machines on September 3, 2024 and sell it today you would earn a total of 1,632 from holding International Business Machines or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. NMI Holdings
Performance |
| Timeline |
| International Business |
| NMI Holdings |
International Business and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and NMI Holdings
The main advantage of trading using opposite International Business and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. FUJITSU LTD ADR | International Business vs. Superior Plus Corp | International Business vs. NMI Holdings | International Business vs. Origin Agritech |
| NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. WT OFFSHORE | NMI Holdings vs. Luckin Coffee | NMI Holdings vs. BJs Restaurants |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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