Correlation Between NMI Holdings and COMINTL BANK

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

By analyzing existing cross correlation between NMI Holdings and COMINTL BANK ADR1, you can compare the effects of market volatilities on NMI Holdings and COMINTL BANK 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 COMINTL BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and COMINTL BANK.

Diversification Opportunities for NMI Holdings and COMINTL BANK

0.03

Correlation Coefficient

NMI Holdings  COMINTL BANK

Significant diversification

The 3 months correlation between NMI and COMINTL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and COMINTL BANK ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMINTL BANK ADR1 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 COMINTL BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMINTL BANK ADR1 has no effect on the direction of NMI Holdings i.e., NMI Holdings and COMINTL BANK go up and down completely randomly.

Pair Corralation between NMI Holdings and COMINTL BANK

Assuming the 90 days horizon NMI Holdings is expected to under-perform the COMINTL BANK. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.27 times less risky than COMINTL BANK. The stock trades about -0.29 of its potential returns per unit of risk. The COMINTL BANK ADR1 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  127.00  in COMINTL BANK ADR1 on December 2, 2024 and sell it today you would earn a total of  1.00  from holding COMINTL BANK ADR1 or generate 0.79% return on investment over 90 days.

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

NMI Holdings  vs.  COMINTL BANK ADR1

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.

COMINTL BANK ADR1

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COMINTL BANK ADR1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COMINTL BANK is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NMI Holdings and COMINTL BANK

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

The idea behind NMI Holdings and COMINTL BANK ADR1 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.