Correlation Between NMI Holdings and Grupo Carso

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

By analyzing existing cross correlation between NMI Holdings and Grupo Carso SAB, you can compare the effects of market volatilities on NMI Holdings and Grupo Carso 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 Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Grupo Carso.

Diversification Opportunities for NMI Holdings and Grupo Carso

0.06

Correlation Coefficient

NMI Holdings  Grupo Carso

Significant diversification

The 3 months correlation between NMI and Grupo is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB 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 Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of NMI Holdings i.e., NMI Holdings and Grupo Carso go up and down completely randomly.

Pair Corralation between NMI Holdings and Grupo Carso

Assuming the 90 days horizon NMI Holdings is expected to under-perform the Grupo Carso. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.21 times less risky than Grupo Carso. The stock trades about -0.09 of its potential returns per unit of risk. The Grupo Carso SAB is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Grupo Carso SAB on November 29, 2024 and sell it today you would lose (35.00) from holding Grupo Carso SAB or give up 6.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NMI Holdings  vs.  Grupo Carso SAB

NMI Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days NMI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Grupo Carso SAB

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NMI Holdings and Grupo Carso

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

The idea behind NMI Holdings and Grupo Carso SAB 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.