Correlation Between Ryan Specialty and NMI Holdings

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

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

Diversification Opportunities for Ryan Specialty and NMI Holdings

0.48

Correlation Coefficient

Ryan Specialty  NMI Holdings

Very weak diversification

The 3 months correlation between Ryan and NMI is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ryan Specialty Group and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Ryan Specialty 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 Ryan Specialty Group 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 Ryan Specialty i.e., Ryan Specialty and NMI Holdings go up and down completely randomly.

Pair Corralation between Ryan Specialty and NMI Holdings

Given the investment horizon of 90 days Ryan Specialty Group is expected to generate 1.19 times more return on investment than NMI Holdings. However, Ryan Specialty is 1.19 times more volatile than NMI Holdings. It trades about 0.11 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.06 per unit of risk. If you would invest  4,217  in Ryan Specialty Group on October 2, 2024 and sell it today you would earn a total of  2,184  from holding Ryan Specialty Group or generate 51.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ryan Specialty Group  vs.  NMI Holdings

Ryan Specialty Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ryan Specialty Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Ryan Specialty and NMI Holdings

The main advantage of trading using opposite Ryan Specialty and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryan Specialty 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 Ryan Specialty Group 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.