Correlation Between NAKED WINES and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both NAKED WINES 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 NAKED WINES and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NAKED WINES PLC and NMI Holdings, you can compare the effects of market volatilities on NAKED WINES 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 NAKED WINES with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and NMI Holdings.
Diversification Opportunities for NAKED WINES and NMI Holdings
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NAKED and NMI is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and NAKED WINES 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 NAKED WINES PLC 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 NAKED WINES i.e., NAKED WINES and NMI Holdings go up and down completely randomly.
Pair Corralation between NAKED WINES and NMI Holdings
Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the NMI Holdings. In addition to that, NAKED WINES is 1.15 times more volatile than NMI Holdings. It trades about -0.07 of its total potential returns per unit of risk. NMI Holdings is currently generating about -0.05 per unit of volatility. If you would invest 3,660 in NMI Holdings on August 25, 2024 and sell it today you would lose (120.00) from holding NMI Holdings or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAKED WINES PLC vs. NMI Holdings
Performance |
| Timeline |
| NAKED WINES PLC |
| NMI Holdings |
NAKED WINES and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and NMI Holdings
The main advantage of trading using opposite NAKED WINES and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES 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.| NAKED WINES vs. Diageo plc | NAKED WINES vs. Superior Plus Corp | NAKED WINES vs. NMI Holdings | NAKED WINES vs. Origin Agritech |
| NMI Holdings vs. Lion One Metals | NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. OFFICE DEPOT | NMI Holdings vs. JAPAN TOBACCO UNSPADR12 |
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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