Correlation Between NMI Holdings and CureVac NV

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

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

Diversification Opportunities for NMI Holdings and CureVac NV

0.57

Correlation Coefficient

NMI Holdings  CureVac NV

Very weak diversification

The 3 months correlation between NMI and CureVac is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and CureVac NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CureVac NV 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 CureVac NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CureVac NV has no effect on the direction of NMI Holdings i.e., NMI Holdings and CureVac NV go up and down completely randomly.

Pair Corralation between NMI Holdings and CureVac NV

Assuming the 90 days horizon NMI Holdings is expected to under-perform the CureVac NV. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 2.91 times less risky than CureVac NV. The stock trades about -0.04 of its potential returns per unit of risk. The CureVac NV is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  296.00  in CureVac NV on December 28, 2024 and sell it today you would lose (28.00) from holding CureVac NV or give up 9.46% of portfolio value over 90 days.

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

NMI Holdings  vs.  CureVac NV

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 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.

CureVac NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days CureVac NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CureVac NV 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 CureVac NV

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

The idea behind NMI Holdings and CureVac NV 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.