Correlation Between NMI Holdings and ROMERIKE SPAREBANK

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

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

Diversification Opportunities for NMI Holdings and ROMERIKE SPAREBANK

0.14

Correlation Coefficient

NMI Holdings  ROMERIKE SPAREBANK

Average diversification

The 3 months correlation between NMI and ROMERIKE is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and ROMERIKE SPAREBANK NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROMERIKE SPAREBANK has no effect on the direction of NMI Holdings i.e., NMI Holdings and ROMERIKE SPAREBANK go up and down completely randomly.

Pair Corralation between NMI Holdings and ROMERIKE SPAREBANK

Assuming the 90 days horizon NMI Holdings is expected to generate 3.28 times less return on investment than ROMERIKE SPAREBANK. In addition to that, NMI Holdings is 2.02 times more volatile than ROMERIKE SPAREBANK NK. It trades about 0.02 of its total potential returns per unit of risk. ROMERIKE SPAREBANK NK is currently generating about 0.12 per unit of volatility. If you would invest  1,003  in ROMERIKE SPAREBANK NK on September 5, 2024 and sell it today you would earn a total of  67.00  from holding ROMERIKE SPAREBANK NK or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

NMI Holdings  vs.  ROMERIKE SPAREBANK NK

NMI Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NMI Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ROMERIKE SPAREBANK

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ROMERIKE SPAREBANK NK are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ROMERIKE SPAREBANK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NMI Holdings and ROMERIKE SPAREBANK

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

The idea behind NMI Holdings and ROMERIKE SPAREBANK NK 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.