Correlation Between NMI Holdings and Agnico Eagle

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

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

Diversification Opportunities for NMI Holdings and Agnico Eagle

-0.27

Correlation Coefficient

NMI Holdings  Agnico Eagle

Very good diversification

The 3 months correlation between NMI and Agnico is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Agnico Eagle Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agnico Eagle Mines 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 Agnico Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agnico Eagle Mines has no effect on the direction of NMI Holdings i.e., NMI Holdings and Agnico Eagle go up and down completely randomly.

Pair Corralation between NMI Holdings and Agnico Eagle

Assuming the 90 days horizon NMI Holdings is expected to under-perform the Agnico Eagle. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.15 times less risky than Agnico Eagle. The stock trades about -0.05 of its potential returns per unit of risk. The Agnico Eagle Mines is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  7,488  in Agnico Eagle Mines on December 28, 2024 and sell it today you would earn a total of  2,260  from holding Agnico Eagle Mines or generate 30.18% return on investment over 90 days.

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

NMI Holdings  vs.  Agnico Eagle Mines

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.

Agnico Eagle Mines

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Agnico Eagle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NMI Holdings and Agnico Eagle

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

The idea behind NMI Holdings and Agnico Eagle Mines 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.