Correlation Between ASPEN TECHINC and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both ASPEN TECHINC 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 ASPEN TECHINC and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASPEN TECHINC DL and NMI Holdings, you can compare the effects of market volatilities on ASPEN TECHINC 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 ASPEN TECHINC with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and NMI Holdings.
Diversification Opportunities for ASPEN TECHINC and NMI Holdings
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between ASPEN and NMI is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and ASPEN TECHINC 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 ASPEN TECHINC DL 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 ASPEN TECHINC i.e., ASPEN TECHINC and NMI Holdings go up and down completely randomly.
Pair Corralation between ASPEN TECHINC and NMI Holdings
Assuming the 90 days horizon ASPEN TECHINC is expected to generate 2.11 times less return on investment than NMI Holdings. But when comparing it to its historical volatility, ASPEN TECHINC DL is 3.07 times less risky than NMI Holdings. It trades about 0.17 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,520 in NMI Holdings on October 24, 2024 and sell it today you would earn a total of 120.00 from holding NMI Holdings or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASPEN TECHINC DL vs. NMI Holdings
Performance |
| Timeline |
| ASPEN TECHINC DL |
| NMI Holdings |
ASPEN TECHINC and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASPEN TECHINC and NMI Holdings
The main advantage of trading using opposite ASPEN TECHINC and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC 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.| ASPEN TECHINC vs. Salesforce | ASPEN TECHINC vs. SAP SE | ASPEN TECHINC vs. Uber Technologies | ASPEN TECHINC vs. PagerDuty |
| NMI Holdings vs. TELECOM ITALRISP ADR10 | NMI Holdings vs. AWILCO DRILLING PLC | NMI Holdings vs. China Communications Services | NMI Holdings vs. Liberty Broadband |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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