Correlation Between NTG Nordic and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both NTG Nordic 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 NTG Nordic and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTG Nordic Transport and NMI Holdings, you can compare the effects of market volatilities on NTG Nordic 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 NTG Nordic with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and NMI Holdings.
Diversification Opportunities for NTG Nordic and NMI Holdings
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between NTG and NMI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and NTG Nordic 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 NTG Nordic Transport 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 NTG Nordic i.e., NTG Nordic and NMI Holdings go up and down completely randomly.
Pair Corralation between NTG Nordic and NMI Holdings
Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the NMI Holdings. But the stock apears to be less risky and, when comparing its historical volatility, NTG Nordic Transport is 1.24 times less risky than NMI Holdings. The stock trades about -0.05 of its potential returns per unit of risk. The NMI Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,580 in NMI Holdings on August 28, 2024 and sell it today you would earn a total of 60.00 from holding NMI Holdings or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NTG Nordic Transport vs. NMI Holdings
Performance |
| Timeline |
| NTG Nordic Transport |
| NMI Holdings |
NTG Nordic and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and NMI Holdings
The main advantage of trading using opposite NTG Nordic and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic 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.| NTG Nordic vs. China Resources Beer | NTG Nordic vs. MYFAIR GOLD P | NTG Nordic vs. Tsingtao Brewery | NTG Nordic vs. HF SINCLAIR P |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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