Correlation Between Vivendi SE and NMI Holdings

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

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

Diversification Opportunities for Vivendi SE and NMI Holdings

-0.58

Correlation Coefficient

Vivendi SE  NMI Holdings

Excellent diversification

The 3 months correlation between Vivendi and NMI is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vivendi SE and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Vivendi SE 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 Vivendi SE 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 Vivendi SE i.e., Vivendi SE and NMI Holdings go up and down completely randomly.

Pair Corralation between Vivendi SE and NMI Holdings

Assuming the 90 days trading horizon Vivendi SE is expected to generate 1.59 times more return on investment than NMI Holdings. However, Vivendi SE is 1.59 times more volatile than NMI Holdings. It trades about 0.08 of its potential returns per unit of risk. NMI Holdings is currently generating about -0.08 per unit of risk. If you would invest  250.00  in Vivendi SE on December 22, 2024 and sell it today you would earn a total of  25.00  from holding Vivendi SE or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Vivendi SE  vs.  NMI Holdings

Vivendi SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vivendi SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Vivendi SE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

NMI Holdings

Risk-Adjusted Performance

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 unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Vivendi SE and NMI Holdings

The main advantage of trading using opposite Vivendi SE and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vivendi SE 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 Vivendi SE 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.