Correlation Between NMI Holdings and Tactile Systems
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Tactile Systems 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 Tactile Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Tactile Systems Technology, you can compare the effects of market volatilities on NMI Holdings and Tactile Systems 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 Tactile Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Tactile Systems.
Diversification Opportunities for NMI Holdings and Tactile Systems
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Tactile is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Tactile Systems Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tactile Systems Tech 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 Tactile Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tactile Systems Tech has no effect on the direction of NMI Holdings i.e., NMI Holdings and Tactile Systems go up and down completely randomly.
Pair Corralation between NMI Holdings and Tactile Systems
Given the investment horizon of 90 days NMI Holdings is expected to generate 0.48 times more return on investment than Tactile Systems. However, NMI Holdings is 2.08 times less risky than Tactile Systems. It trades about 0.08 of its potential returns per unit of risk. Tactile Systems Technology is currently generating about 0.03 per unit of risk. If you would invest 2,301 in NMI Holdings on November 9, 2024 and sell it today you would earn a total of 1,579 from holding NMI Holdings or generate 68.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Tactile Systems Technology
Performance |
| Timeline |
| NMI Holdings |
| Tactile Systems Tech |
NMI Holdings and Tactile Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Tactile Systems
The main advantage of trading using opposite NMI Holdings and Tactile Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Tactile Systems 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 Tactile Systems will offset losses from the drop in Tactile Systems' long position.| NMI Holdings vs. MGIC Investment Corp | NMI Holdings vs. Employers Holdings | NMI Holdings vs. James River Group | NMI Holdings vs. ICC Holdings |
| Tactile Systems vs. CONMED | Tactile Systems vs. Treace Medical Concepts | Tactile Systems vs. SurModics | Tactile Systems vs. LivaNova PLC |
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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