Correlation Between Compagnie and NMI Holdings

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Compagnie and NMI Holdings 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 Compagnie and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie de Saint Gobain and NMI Holdings, you can compare the effects of market volatilities on Compagnie and NMI Holdings 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 Compagnie with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and NMI Holdings.

Diversification Opportunities for Compagnie and NMI Holdings

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Compagnie and NMI is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of Compagnie i.e., Compagnie and NMI Holdings go up and down completely randomly.

Pair Corralation between Compagnie and NMI Holdings

Assuming the 90 days horizon Compagnie de Saint Gobain is expected to generate 0.79 times more return on investment than NMI Holdings. However, Compagnie de Saint Gobain is 1.27 times less risky than NMI Holdings. It trades about 0.02 of its potential returns per unit of risk. NMI Holdings is currently generating about -0.31 per unit of risk. If you would invest  8,578  in Compagnie de Saint Gobain on October 4, 2024 and sell it today you would earn a total of  22.00  from holding Compagnie de Saint Gobain or generate 0.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Compagnie de Saint Gobain  vs.  NMI Holdings

 Performance 
       Timeline  
Compagnie de Saint 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Compagnie is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
NMI Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NMI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Compagnie and NMI Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Compagnie and NMI Holdings

The main advantage of trading using opposite Compagnie and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.
The idea behind Compagnie de Saint Gobain and NMI Holdings 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.
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

Other Complementary Tools

Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories