Correlation Between NMI Holdings and TAMURA P

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

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

Diversification Opportunities for NMI Holdings and TAMURA P

0.18

Correlation Coefficient

NMI Holdings  TAMURA P

Average diversification

The 3 months correlation between NMI and TAMURA is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and TAMURA P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAMURA P 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 TAMURA P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAMURA P has no effect on the direction of NMI Holdings i.e., NMI Holdings and TAMURA P go up and down completely randomly.

Pair Corralation between NMI Holdings and TAMURA P

Assuming the 90 days horizon NMI Holdings is expected to generate 1.16 times more return on investment than TAMURA P. However, NMI Holdings is 1.16 times more volatile than TAMURA P. It trades about 0.08 of its potential returns per unit of risk. TAMURA P is currently generating about -0.06 per unit of risk. If you would invest  3,380  in NMI Holdings on October 6, 2024 and sell it today you would earn a total of  180.00  from holding NMI Holdings or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

NMI Holdings  vs.  TAMURA P

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.

TAMURA P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TAMURA P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NMI Holdings and TAMURA P

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

The idea behind NMI Holdings and TAMURA P 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 Transaction History module to view history of all your transactions and understand their impact on performance.