Correlation Between Phibro Animal and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Phibro Animal 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 Phibro Animal and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phibro Animal Health and NMI Holdings, you can compare the effects of market volatilities on Phibro Animal 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 Phibro Animal with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phibro Animal and NMI Holdings.
Diversification Opportunities for Phibro Animal and NMI Holdings
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Phibro and NMI is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Phibro Animal 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 Phibro Animal Health 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 Phibro Animal i.e., Phibro Animal and NMI Holdings go up and down completely randomly.
Pair Corralation between Phibro Animal and NMI Holdings
Given the investment horizon of 90 days Phibro Animal Health is expected to generate 1.96 times more return on investment than NMI Holdings. However, Phibro Animal is 1.96 times more volatile than NMI Holdings. It trades about 0.05 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.08 per unit of risk. If you would invest 1,490 in Phibro Animal Health on November 9, 2024 and sell it today you would earn a total of 968.00 from holding Phibro Animal Health or generate 64.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phibro Animal Health vs. NMI Holdings
Performance |
| Timeline |
| Phibro Animal Health |
| NMI Holdings |
Phibro Animal and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phibro Animal and NMI Holdings
The main advantage of trading using opposite Phibro Animal and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phibro Animal 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.| Phibro Animal vs. Pacira BioSciences, | Phibro Animal vs. Dr Reddys Laboratories | Phibro Animal vs. Collegium Pharmaceutical | Phibro Animal vs. ANI Pharmaceuticals |
| NMI Holdings vs. MGIC Investment Corp | NMI Holdings vs. Employers Holdings | NMI Holdings vs. James River Group | NMI Holdings vs. ICC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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