Correlation Between NMI Holdings and Enact Holdings
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Enact 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 NMI Holdings and Enact Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Enact Holdings, you can compare the effects of market volatilities on NMI Holdings and Enact 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 NMI Holdings with a short position of Enact Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Enact Holdings.
Diversification Opportunities for NMI Holdings and Enact Holdings
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NMI and Enact is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Enact Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enact Holdings and NMI Holdings 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 NMI Holdings are associated (or correlated) with Enact Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enact Holdings has no effect on the direction of NMI Holdings i.e., NMI Holdings and Enact Holdings go up and down completely randomly.
Pair Corralation between NMI Holdings and Enact Holdings
Given the investment horizon of 90 days NMI Holdings is expected to generate 1.36 times more return on investment than Enact Holdings. However, NMI Holdings is 1.36 times more volatile than Enact Holdings. It trades about 0.18 of its potential returns per unit of risk. Enact Holdings is currently generating about 0.2 per unit of risk. If you would invest 3,660 in NMI Holdings on November 3, 2024 and sell it today you would earn a total of 202.00 from holding NMI Holdings or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Enact Holdings
Performance |
| Timeline |
| NMI Holdings |
| Enact Holdings |
NMI Holdings and Enact Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Enact Holdings
The main advantage of trading using opposite NMI Holdings and Enact Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Enact 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 Enact Holdings will offset losses from the drop in Enact Holdings' long position.| NMI Holdings vs. MGIC Investment Corp | NMI Holdings vs. Employers Holdings | NMI Holdings vs. James River Group | NMI Holdings vs. ICC Holdings |
| Enact Holdings vs. Assured Guaranty | Enact Holdings vs. AMERISAFE | Enact Holdings vs. MBIA Inc | Enact Holdings vs. ICC Holdings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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