Correlation Between NMI Holdings and AXA SA

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

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

Diversification Opportunities for NMI Holdings and AXA SA

-0.49

Correlation Coefficient

NMI Holdings  AXA SA

Very good diversification

The 3 months correlation between NMI and AXA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA 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 AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of NMI Holdings i.e., NMI Holdings and AXA SA go up and down completely randomly.

Pair Corralation between NMI Holdings and AXA SA

Assuming the 90 days horizon NMI Holdings is expected to under-perform the AXA SA. In addition to that, NMI Holdings is 1.21 times more volatile than AXA SA. It trades about -0.08 of its total potential returns per unit of risk. AXA SA is currently generating about 0.26 per unit of volatility. If you would invest  3,360  in AXA SA on December 11, 2024 and sell it today you would earn a total of  500.00  from holding AXA SA or generate 14.88% return on investment over 90 days.

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

NMI Holdings  vs.  AXA SA

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AXA SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AXA SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NMI Holdings and AXA SA

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

The idea behind NMI Holdings and AXA SA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.