Correlation Between NMI Holdings and Wynn Resorts
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Wynn Resorts 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 Wynn Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Wynn Resorts Limited, you can compare the effects of market volatilities on NMI Holdings and Wynn Resorts 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 Wynn Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Wynn Resorts.
Diversification Opportunities for NMI Holdings and Wynn Resorts
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Wynn is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited 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 Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of NMI Holdings i.e., NMI Holdings and Wynn Resorts go up and down completely randomly.
Pair Corralation between NMI Holdings and Wynn Resorts
Assuming the 90 days horizon NMI Holdings is expected to generate 0.88 times more return on investment than Wynn Resorts. However, NMI Holdings is 1.14 times less risky than Wynn Resorts. It trades about 0.0 of its potential returns per unit of risk. Wynn Resorts Limited is currently generating about -0.06 per unit of risk. If you would invest 3,660 in NMI Holdings on October 24, 2024 and sell it today you would lose (60.00) from holding NMI Holdings or give up 1.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NMI Holdings vs. Wynn Resorts Limited
Performance |
Timeline |
NMI Holdings |
Wynn Resorts Limited |
NMI Holdings and Wynn Resorts Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NMI Holdings and Wynn Resorts
The main advantage of trading using opposite NMI Holdings and Wynn Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Wynn Resorts 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 Wynn Resorts will offset losses from the drop in Wynn Resorts' long position.NMI Holdings vs. FAST RETAIL ADR | NMI Holdings vs. FIRST SAVINGS FINL | NMI Holdings vs. MGIC INVESTMENT | NMI Holdings vs. Ross Stores |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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