Correlation Between Schneider Electric and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Schneider Electric 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 Schneider Electric and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schneider Electric SE and NMI Holdings, you can compare the effects of market volatilities on Schneider Electric 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 Schneider Electric with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schneider Electric and NMI Holdings.
Diversification Opportunities for Schneider Electric and NMI Holdings
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Schneider and NMI is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Schneider Electric SE and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Schneider Electric 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 Schneider Electric SE 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 Schneider Electric i.e., Schneider Electric and NMI Holdings go up and down completely randomly.
Pair Corralation between Schneider Electric and NMI Holdings
Assuming the 90 days trading horizon Schneider Electric is expected to generate 1.78 times less return on investment than NMI Holdings. In addition to that, Schneider Electric is 1.02 times more volatile than NMI Holdings. It trades about 0.06 of its total potential returns per unit of risk. NMI Holdings is currently generating about 0.1 per unit of volatility. If you would invest 3,000 in NMI Holdings on September 3, 2024 and sell it today you would earn a total of 760.00 from holding NMI Holdings or generate 25.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schneider Electric SE vs. NMI Holdings
Performance |
| Timeline |
| Schneider Electric |
| NMI Holdings |
Schneider Electric and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schneider Electric and NMI Holdings
The main advantage of trading using opposite Schneider Electric and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schneider Electric 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.| Schneider Electric vs. SIEMENS AG SP | Schneider Electric vs. Siemens Aktiengesellschaft | Schneider Electric vs. Siemens Aktiengesellschaft | Schneider Electric vs. Atlas Copco A |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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