Correlation Between NMI Holdings and DSV Panalpina

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

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

Diversification Opportunities for NMI Holdings and DSV Panalpina

0.37

Correlation Coefficient

NMI Holdings  DSV Panalpina

Weak diversification

The 3 months correlation between NMI and DSV is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS 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 DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of NMI Holdings i.e., NMI Holdings and DSV Panalpina go up and down completely randomly.

Pair Corralation between NMI Holdings and DSV Panalpina

Assuming the 90 days horizon NMI Holdings is expected to under-perform the DSV Panalpina. In addition to that, NMI Holdings is 1.16 times more volatile than DSV Panalpina AS. It trades about -0.29 of its total potential returns per unit of risk. DSV Panalpina AS is currently generating about 0.02 per unit of volatility. If you would invest  20,480  in DSV Panalpina AS on October 5, 2024 and sell it today you would earn a total of  70.00  from holding DSV Panalpina AS or generate 0.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

NMI Holdings  vs.  DSV Panalpina AS

NMI Holdings

Risk-Adjusted Performance

0 of 100

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 fragile 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.

DSV Panalpina AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DSV Panalpina 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 DSV Panalpina

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

The idea behind NMI Holdings and DSV Panalpina AS 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 CEOs Directory module to screen CEOs from public companies around the world.