Correlation Between Interpublic Group and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Interpublic Group 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 Interpublic Group and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Interpublic Group and NMI Holdings, you can compare the effects of market volatilities on Interpublic Group 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 Interpublic Group with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interpublic Group and NMI Holdings.
Diversification Opportunities for Interpublic Group and NMI Holdings
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Interpublic and NMI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Interpublic Group and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Interpublic Group 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 The Interpublic Group 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 Interpublic Group i.e., Interpublic Group and NMI Holdings go up and down completely randomly.
Pair Corralation between Interpublic Group and NMI Holdings
Assuming the 90 days horizon Interpublic Group is expected to generate 2.36 times less return on investment than NMI Holdings. But when comparing it to its historical volatility, The Interpublic Group is 1.14 times less risky than NMI Holdings. It trades about 0.02 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,580 in NMI Holdings on August 27, 2024 and sell it today you would earn a total of 60.00 from holding NMI Holdings or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Interpublic Group vs. NMI Holdings
Performance |
| Timeline |
| Interpublic Group |
| NMI Holdings |
Interpublic Group and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interpublic Group and NMI Holdings
The main advantage of trading using opposite Interpublic Group and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interpublic Group 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.| Interpublic Group vs. Superior Plus Corp | Interpublic Group vs. NMI Holdings | Interpublic Group vs. Origin Agritech | Interpublic Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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