Correlation Between NMI Holdings and Intel

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

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

Diversification Opportunities for NMI Holdings and Intel

-0.08

Correlation Coefficient

NMI Holdings  Intel

Good diversification

The 3 months correlation between NMI and Intel is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of NMI Holdings i.e., NMI Holdings and Intel go up and down completely randomly.

Pair Corralation between NMI Holdings and Intel

Assuming the 90 days horizon NMI Holdings is expected to generate 0.49 times more return on investment than Intel. However, NMI Holdings is 2.06 times less risky than Intel. It trades about 0.08 of its potential returns per unit of risk. Intel is currently generating about -0.07 per unit of risk. If you would invest  2,600  in NMI Holdings on October 5, 2024 and sell it today you would earn a total of  900.00  from holding NMI Holdings or generate 34.62% 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.  Intel

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.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Intel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NMI Holdings and Intel

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

The idea behind NMI Holdings and Intel 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.