Correlation Between NMI Holdings and SP Global
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and SP Global 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 SP Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and SP Global, you can compare the effects of market volatilities on NMI Holdings and SP Global 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 SP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and SP Global.
Diversification Opportunities for NMI Holdings and SP Global
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NMI and MHL is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Global 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 SP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Global has no effect on the direction of NMI Holdings i.e., NMI Holdings and SP Global go up and down completely randomly.
Pair Corralation between NMI Holdings and SP Global
Assuming the 90 days horizon NMI Holdings is expected to under-perform the SP Global. In addition to that, NMI Holdings is 1.11 times more volatile than SP Global. It trades about -0.13 of its total potential returns per unit of risk. SP Global is currently generating about -0.03 per unit of volatility. If you would invest 46,916 in SP Global on December 18, 2024 and sell it today you would lose (1,531) from holding SP Global or give up 3.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NMI Holdings vs. SP Global
Performance |
Timeline |
NMI Holdings |
SP Global |
NMI Holdings and SP Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NMI Holdings and SP Global
The main advantage of trading using opposite NMI Holdings and SP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, SP Global 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 SP Global will offset losses from the drop in SP Global's long position.NMI Holdings vs. STRAYER EDUCATION | NMI Holdings vs. SERI INDUSTRIAL EO | NMI Holdings vs. AIR PRODCHEMICALS | NMI Holdings vs. GALENA MINING LTD |
SP Global vs. CHINA EDUCATION GROUP | SP Global vs. CNVISION MEDIA | SP Global vs. Ubisoft Entertainment SA | SP Global vs. Emperor Entertainment Hotel |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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