Correlation Between Laureate Education and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Laureate Education 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 Laureate Education and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and NMI Holdings, you can compare the effects of market volatilities on Laureate Education 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 Laureate Education with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and NMI Holdings.
Diversification Opportunities for Laureate Education and NMI Holdings
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Laureate and NMI is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Laureate Education 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 Laureate Education 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 Laureate Education i.e., Laureate Education and NMI Holdings go up and down completely randomly.
Pair Corralation between Laureate Education and NMI Holdings
Assuming the 90 days trading horizon Laureate Education is expected to generate 1.54 times more return on investment than NMI Holdings. However, Laureate Education is 1.54 times more volatile than NMI Holdings. It trades about 0.3 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.13 per unit of risk. If you would invest 1,420 in Laureate Education on August 31, 2024 and sell it today you would earn a total of 360.00 from holding Laureate Education or generate 25.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. NMI Holdings
Performance |
| Timeline |
| Laureate Education |
| NMI Holdings |
Laureate Education and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and NMI Holdings
The main advantage of trading using opposite Laureate Education and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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.| Laureate Education vs. Universal Insurance Holdings | Laureate Education vs. Zurich Insurance Group | Laureate Education vs. HANOVER INSURANCE | Laureate Education vs. Perseus Mining Limited |
| NMI Holdings vs. Iridium Communications | NMI Holdings vs. BOS BETTER ONLINE | NMI Holdings vs. Verizon Communications | NMI Holdings vs. Singapore Telecommunications Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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