Correlation Between NMI Holdings and Collins Foods
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Collins Foods 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 Collins Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Collins Foods Limited, you can compare the effects of market volatilities on NMI Holdings and Collins Foods 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 Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Collins Foods.
Diversification Opportunities for NMI Holdings and Collins Foods
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NMI and Collins is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Collins Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods Limited 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods Limited has no effect on the direction of NMI Holdings i.e., NMI Holdings and Collins Foods go up and down completely randomly.
Pair Corralation between NMI Holdings and Collins Foods
Assuming the 90 days horizon NMI Holdings is expected to under-perform the Collins Foods. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.38 times less risky than Collins Foods. The stock trades about -0.04 of its potential returns per unit of risk. The Collins Foods Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 438.00 in Collins Foods Limited on December 28, 2024 and sell it today you would earn a total of 72.00 from holding Collins Foods Limited or generate 16.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NMI Holdings vs. Collins Foods Limited
Performance |
Timeline |
NMI Holdings |
Collins Foods Limited |
NMI Holdings and Collins Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NMI Holdings and Collins Foods
The main advantage of trading using opposite NMI Holdings and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.NMI Holdings vs. GRIFFIN MINING LTD | NMI Holdings vs. CITY OFFICE REIT | NMI Holdings vs. American Homes 4 | NMI Holdings vs. CENTURIA OFFICE REIT |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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