Correlation Between NORWEGIAN AIR and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR 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 NORWEGIAN AIR and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORWEGIAN AIR SHUT and NMI Holdings, you can compare the effects of market volatilities on NORWEGIAN AIR 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 NORWEGIAN AIR with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and NMI Holdings.
Diversification Opportunities for NORWEGIAN AIR and NMI Holdings
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NORWEGIAN and NMI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and NORWEGIAN AIR 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 NORWEGIAN AIR SHUT 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 NORWEGIAN AIR i.e., NORWEGIAN AIR and NMI Holdings go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and NMI Holdings
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to under-perform the NMI Holdings. In addition to that, NORWEGIAN AIR is 1.53 times more volatile than NMI Holdings. It trades about -0.09 of its total potential returns per unit of risk. NMI Holdings is currently generating about -0.14 per unit of volatility. If you would invest 3,700 in NMI Holdings on October 9, 2024 and sell it today you would lose (140.00) from holding NMI Holdings or give up 3.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORWEGIAN AIR SHUT vs. NMI Holdings
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| NMI Holdings |
NORWEGIAN AIR and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and NMI Holdings
The main advantage of trading using opposite NORWEGIAN AIR and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR 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.| NORWEGIAN AIR vs. REVO INSURANCE SPA | NORWEGIAN AIR vs. PNC Financial Services | NORWEGIAN AIR vs. DELTA AIR LINES | NORWEGIAN AIR vs. Synchrony Financial |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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