Correlation Between NMI Holdings and DRONE VOLT

Can any of the company-specific risk be diversified away by investing in both NMI Holdings and DRONE VOLT 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 NMI Holdings and DRONE VOLT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NMI Holdings and DRONE VOLT SACA, you can compare the effects of market volatilities on NMI Holdings and DRONE VOLT 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 NMI Holdings with a short position of DRONE VOLT. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and DRONE VOLT.

Diversification Opportunities for NMI Holdings and DRONE VOLT

-0.2

Correlation Coefficient

NMI Holdings  DRONE VOLT

Good diversification

The 3 months correlation between NMI and DRONE is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and DRONE VOLT SACA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRONE VOLT SACA and NMI Holdings 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 NMI Holdings are associated (or correlated) with DRONE VOLT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRONE VOLT SACA has no effect on the direction of NMI Holdings i.e., NMI Holdings and DRONE VOLT go up and down completely randomly.

Pair Corralation between NMI Holdings and DRONE VOLT

Assuming the 90 days horizon NMI Holdings is expected to generate 3.23 times less return on investment than DRONE VOLT. But when comparing it to its historical volatility, NMI Holdings is 3.67 times less risky than DRONE VOLT. It trades about 0.07 of its potential returns per unit of risk. DRONE VOLT SACA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  31.00  in DRONE VOLT SACA on October 9, 2024 and sell it today you would earn a total of  2.00  from holding DRONE VOLT SACA or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.3%
Values	Daily Returns

NMI Holdings  vs.  DRONE VOLT SACA

NMI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NMI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DRONE VOLT SACA

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days DRONE VOLT SACA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, DRONE VOLT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NMI Holdings and DRONE VOLT

The main advantage of trading using opposite NMI Holdings and DRONE VOLT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, DRONE VOLT 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 DRONE VOLT will offset losses from the drop in DRONE VOLT's long position.

The idea behind NMI Holdings and DRONE VOLT SACA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.