Correlation Between NMI Holdings and Assurant
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Assurant 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 Assurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Assurant, you can compare the effects of market volatilities on NMI Holdings and Assurant 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 Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Assurant.
Diversification Opportunities for NMI Holdings and Assurant
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Assurant is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant 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 Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of NMI Holdings i.e., NMI Holdings and Assurant go up and down completely randomly.
Pair Corralation between NMI Holdings and Assurant
Given the investment horizon of 90 days NMI Holdings is expected to generate 31.36 times less return on investment than Assurant. In addition to that, NMI Holdings is 1.29 times more volatile than Assurant. It trades about 0.01 of its total potential returns per unit of risk. Assurant is currently generating about 0.44 per unit of volatility. If you would invest 19,423 in Assurant on August 27, 2024 and sell it today you would earn a total of 3,192 from holding Assurant or generate 16.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Assurant
Performance |
| Timeline |
| NMI Holdings |
| Assurant |
NMI Holdings and Assurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Assurant
The main advantage of trading using opposite NMI Holdings and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Assurant 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 Assurant will offset losses from the drop in Assurant's long position.| NMI Holdings vs. MGIC Investment Corp | NMI Holdings vs. Employers Holdings | NMI Holdings vs. James River Group | NMI Holdings vs. ICC Holdings |
| Assurant vs. Assured Guaranty | Assurant vs. Ambac Financial Group | Assurant vs. AMERISAFE | Assurant vs. Enact 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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