Correlation Between Southern Copper and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Southern Copper 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 Southern Copper and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Copper and NMI Holdings, you can compare the effects of market volatilities on Southern Copper 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 Southern Copper with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Copper and NMI Holdings.
Diversification Opportunities for Southern Copper and NMI Holdings
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Southern and NMI is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Southern Copper and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Southern Copper 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 Southern Copper 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 Southern Copper i.e., Southern Copper and NMI Holdings go up and down completely randomly.
Pair Corralation between Southern Copper and NMI Holdings
Assuming the 90 days horizon Southern Copper is expected to generate 1.45 times more return on investment than NMI Holdings. However, Southern Copper is 1.45 times more volatile than NMI Holdings. It trades about 0.07 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.09 per unit of risk. If you would invest 5,182 in Southern Copper on September 13, 2024 and sell it today you would earn a total of 4,654 from holding Southern Copper or generate 89.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Copper vs. NMI Holdings
Performance |
| Timeline |
| Southern Copper |
| NMI Holdings |
Southern Copper and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Copper and NMI Holdings
The main advantage of trading using opposite Southern Copper and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Copper 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.| Southern Copper vs. Sandfire Resources Limited | Southern Copper vs. Superior Plus Corp | Southern Copper vs. NMI Holdings | Southern Copper vs. SIVERS SEMICONDUCTORS AB |
| NMI Holdings vs. JJ SNACK FOODS | NMI Holdings vs. Tradegate AG Wertpapierhandelsbank | NMI Holdings vs. JSC Halyk bank | NMI Holdings vs. VARIOUS EATERIES LS |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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