Correlation Between NMI Holdings and Fidelity National
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Fidelity National 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 Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Fidelity National Financial, you can compare the effects of market volatilities on NMI Holdings and Fidelity National 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 Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Fidelity National.
Diversification Opportunities for NMI Holdings and Fidelity National
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and Fidelity is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Fidelity National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of NMI Holdings i.e., NMI Holdings and Fidelity National go up and down completely randomly.
Pair Corralation between NMI Holdings and Fidelity National
Given the investment horizon of 90 days NMI Holdings is expected to generate 1.01 times more return on investment than Fidelity National. However, NMI Holdings is 1.01 times more volatile than Fidelity National Financial. It trades about 0.11 of its potential returns per unit of risk. Fidelity National Financial is currently generating about 0.11 per unit of risk. If you would invest 2,729 in NMI Holdings on August 31, 2024 and sell it today you would earn a total of 1,274 from holding NMI Holdings or generate 46.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Fidelity National Financial
Performance |
| Timeline |
| NMI Holdings |
| Fidelity National |
NMI Holdings and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Fidelity National
The main advantage of trading using opposite NMI Holdings and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National'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 |
| Fidelity National vs. AXIS Capital Holdings | Fidelity National vs. Assured Guaranty | Fidelity National vs. Enact Holdings | Fidelity National vs. NMI 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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