Correlation Between Calibre Mining and NMI Holdings

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

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

Diversification Opportunities for Calibre Mining and NMI Holdings

0.65

Correlation Coefficient

Calibre Mining  NMI Holdings

Poor diversification

The 3 months correlation between Calibre and NMI is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Calibre Mining Corp and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Calibre Mining 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 Calibre Mining Corp 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 Calibre Mining i.e., Calibre Mining and NMI Holdings go up and down completely randomly.

Pair Corralation between Calibre Mining and NMI Holdings

Assuming the 90 days trading horizon Calibre Mining Corp is expected to under-perform the NMI Holdings. In addition to that, Calibre Mining is 1.66 times more volatile than NMI Holdings. It trades about -0.19 of its total potential returns per unit of risk. NMI Holdings is currently generating about -0.14 per unit of volatility. If you would invest  3,700  in NMI Holdings on October 8, 2024 and sell it today you would lose (140.00) from holding NMI Holdings or give up 3.78% of portfolio value over 90 days.

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

Calibre Mining Corp  vs.  NMI Holdings

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calibre Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Calibre Mining and NMI Holdings

The main advantage of trading using opposite Calibre Mining and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calibre Mining 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 Calibre Mining Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.