Correlation Between STMicroelectronics and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics 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 STMicroelectronics and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and NMI Holdings, you can compare the effects of market volatilities on STMicroelectronics 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 STMicroelectronics with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and NMI Holdings.
Diversification Opportunities for STMicroelectronics and NMI Holdings
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between STMicroelectronics and NMI is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and STMicroelectronics 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 STMicroelectronics NV 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 STMicroelectronics i.e., STMicroelectronics and NMI Holdings go up and down completely randomly.
Pair Corralation between STMicroelectronics and NMI Holdings
Assuming the 90 days horizon STMicroelectronics NV is expected to generate 1.54 times more return on investment than NMI Holdings. However, STMicroelectronics is 1.54 times more volatile than NMI Holdings. It trades about 0.06 of its potential returns per unit of risk. NMI Holdings is currently generating about -0.12 per unit of risk. If you would invest 2,523 in STMicroelectronics NV on October 11, 2024 and sell it today you would earn a total of 53.00 from holding STMicroelectronics NV or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
STMicroelectronics NV vs. NMI Holdings
Performance |
| Timeline |
| STMicroelectronics |
| NMI Holdings |
STMicroelectronics and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and NMI Holdings
The main advantage of trading using opposite STMicroelectronics and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics 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.| STMicroelectronics vs. TAL Education Group | STMicroelectronics vs. THRACE PLASTICS | STMicroelectronics vs. Summit Materials | STMicroelectronics vs. Heidelberg Materials AG |
| NMI Holdings vs. STMicroelectronics NV | NMI Holdings vs. Shenzhen Investment Limited | NMI Holdings vs. ECHO INVESTMENT ZY | NMI Holdings vs. ARROW ELECTRONICS |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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