Correlation Between CVW CLEANTECH and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both CVW CLEANTECH 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 CVW CLEANTECH and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CLEANTECH INC and NMI Holdings, you can compare the effects of market volatilities on CVW CLEANTECH 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 CVW CLEANTECH with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CLEANTECH and NMI Holdings.
Diversification Opportunities for CVW CLEANTECH and NMI Holdings
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVW and NMI is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and CVW CLEANTECH 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 CVW CLEANTECH INC 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 CVW CLEANTECH i.e., CVW CLEANTECH and NMI Holdings go up and down completely randomly.
Pair Corralation between CVW CLEANTECH and NMI Holdings
Assuming the 90 days trading horizon CVW CLEANTECH is expected to generate 1.13 times less return on investment than NMI Holdings. But when comparing it to its historical volatility, CVW CLEANTECH INC is 1.41 times less risky than NMI Holdings. It trades about 0.16 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,580 in NMI Holdings on August 30, 2024 and sell it today you would earn a total of 220.00 from holding NMI Holdings or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CLEANTECH INC vs. NMI Holdings
Performance |
| Timeline |
| CVW CLEANTECH INC |
| NMI Holdings |
CVW CLEANTECH and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CLEANTECH and NMI Holdings
The main advantage of trading using opposite CVW CLEANTECH and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CLEANTECH 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.| CVW CLEANTECH vs. Anglo American plc | CVW CLEANTECH vs. NEXA RESOURCES SA | CVW CLEANTECH vs. ADRIATIC METALS LS 013355 | CVW CLEANTECH vs. Superior Plus Corp |
| NMI Holdings vs. Perseus Mining Limited | NMI Holdings vs. CVW CLEANTECH INC | NMI Holdings vs. Warner Music Group | NMI Holdings vs. Tencent Music Entertainment |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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