Correlation Between SCOTTIE RESOURCES and NMI Holdings

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

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

Diversification Opportunities for SCOTTIE RESOURCES and NMI Holdings

0.28

Correlation Coefficient

SCOTTIE RESOURCES  NMI Holdings

Modest diversification

The 3 months correlation between SCOTTIE and NMI is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SCOTTIE RESOURCES P and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and SCOTTIE RESOURCES 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 SCOTTIE RESOURCES P 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 SCOTTIE RESOURCES i.e., SCOTTIE RESOURCES and NMI Holdings go up and down completely randomly.

Pair Corralation between SCOTTIE RESOURCES and NMI Holdings

If you would invest  10.00  in SCOTTIE RESOURCES P on October 6, 2024 and sell it today you would earn a total of  0.00  from holding SCOTTIE RESOURCES P or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

SCOTTIE RESOURCES P  vs.  NMI Holdings

SCOTTIE RESOURCES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCOTTIE RESOURCES P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SCOTTIE RESOURCES and NMI Holdings

The main advantage of trading using opposite SCOTTIE RESOURCES and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTTIE RESOURCES 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 SCOTTIE RESOURCES P 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.