Correlation Between Resmed and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Resmed 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 Resmed and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resmed Inc DRC and NMI Holdings, you can compare the effects of market volatilities on Resmed 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 Resmed with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resmed and NMI Holdings.
Diversification Opportunities for Resmed and NMI Holdings
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Resmed and NMI is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Resmed Inc DRC and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Resmed 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 Resmed Inc DRC 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 Resmed i.e., Resmed and NMI Holdings go up and down completely randomly.
Pair Corralation between Resmed and NMI Holdings
Assuming the 90 days trading horizon Resmed is expected to generate 3.07 times less return on investment than NMI Holdings. In addition to that, Resmed is 1.35 times more volatile than NMI Holdings. It trades about 0.02 of its total potential returns per unit of risk. NMI Holdings is currently generating about 0.07 per unit of volatility. If you would invest 2,040 in NMI Holdings on October 13, 2024 and sell it today you would earn a total of 1,420 from holding NMI Holdings or generate 69.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resmed Inc DRC vs. NMI Holdings
Performance |
| Timeline |
| Resmed Inc DRC |
| NMI Holdings |
Resmed and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resmed and NMI Holdings
The main advantage of trading using opposite Resmed and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resmed 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.| Resmed vs. Sartorius Stedim Biotech | Resmed vs. Superior Plus Corp | Resmed vs. NMI Holdings | Resmed vs. SIVERS SEMICONDUCTORS AB |
| NMI Holdings vs. REVO INSURANCE SPA | NMI Holdings vs. Quaker Chemical | NMI Holdings vs. Cincinnati Financial Corp | NMI Holdings vs. Erste Group Bank |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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