Correlation Between DELTA AIR and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both DELTA 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 DELTA 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 DELTA AIR LINES and NMI Holdings, you can compare the effects of market volatilities on DELTA 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 DELTA AIR with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DELTA AIR and NMI Holdings.
Diversification Opportunities for DELTA AIR and NMI Holdings
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between DELTA and NMI is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and DELTA 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 DELTA AIR LINES 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 DELTA AIR i.e., DELTA AIR and NMI Holdings go up and down completely randomly.
Pair Corralation between DELTA AIR and NMI Holdings
Assuming the 90 days trading horizon DELTA AIR LINES is expected to generate 1.56 times more return on investment than NMI Holdings. However, DELTA AIR is 1.56 times more volatile than NMI Holdings. It trades about 0.23 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.12 per unit of risk. If you would invest 5,864 in DELTA AIR LINES on October 24, 2024 and sell it today you would earn a total of 642.00 from holding DELTA AIR LINES or generate 10.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
DELTA AIR LINES vs. NMI Holdings
Performance |
Timeline |
DELTA AIR LINES |
NMI Holdings |
DELTA AIR and NMI Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DELTA AIR and NMI Holdings
The main advantage of trading using opposite DELTA AIR and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DELTA 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.DELTA AIR vs. SLR Investment Corp | DELTA AIR vs. Guangdong Investment Limited | DELTA AIR vs. ScanSource | DELTA AIR vs. Apollo Investment Corp |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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