Correlation Between LESLIES INC and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both LESLIES INC 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 LESLIES INC and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LESLIES INC DL and NMI Holdings, you can compare the effects of market volatilities on LESLIES INC 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 LESLIES INC with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LESLIES INC and NMI Holdings.
Diversification Opportunities for LESLIES INC and NMI Holdings
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LESLIES and NMI is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding LESLIES INC DL and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and LESLIES INC 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 LESLIES INC DL 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 LESLIES INC i.e., LESLIES INC and NMI Holdings go up and down completely randomly.
Pair Corralation between LESLIES INC and NMI Holdings
Assuming the 90 days horizon LESLIES INC DL is expected to generate 2.55 times more return on investment than NMI Holdings. However, LESLIES INC is 2.55 times more volatile than NMI Holdings. It trades about 0.07 of its potential returns per unit of risk. NMI Holdings is currently generating about -0.03 per unit of risk. If you would invest 246.00 in LESLIES INC DL on August 25, 2024 and sell it today you would earn a total of 16.00 from holding LESLIES INC DL or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LESLIES INC DL vs. NMI Holdings
Performance |
| Timeline |
| LESLIES INC DL |
| NMI Holdings |
LESLIES INC and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LESLIES INC and NMI Holdings
The main advantage of trading using opposite LESLIES INC and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LESLIES INC 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.| LESLIES INC vs. The Home Depot | LESLIES INC vs. WICKES GROUP PLC | LESLIES INC vs. Superior Plus Corp | LESLIES INC vs. NMI Holdings |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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