Correlation Between NMI Holdings and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and HCA Healthcare 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 NMI Holdings and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and HCA Healthcare, you can compare the effects of market volatilities on NMI Holdings and HCA Healthcare 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 NMI Holdings with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and HCA Healthcare.
Diversification Opportunities for NMI Holdings and HCA Healthcare
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and HCA is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and NMI Holdings 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 NMI Holdings are associated (or correlated) with HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of NMI Holdings i.e., NMI Holdings and HCA Healthcare go up and down completely randomly.
Pair Corralation between NMI Holdings and HCA Healthcare
Assuming the 90 days horizon NMI Holdings is expected to generate 0.98 times more return on investment than HCA Healthcare. However, NMI Holdings is 1.02 times less risky than HCA Healthcare. It trades about 0.04 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.12 per unit of risk. If you would invest 3,560 in NMI Holdings on September 12, 2024 and sell it today you would earn a total of 140.00 from holding NMI Holdings or generate 3.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NMI Holdings vs. HCA Healthcare
Performance |
Timeline |
NMI Holdings |
HCA Healthcare |
NMI Holdings and HCA Healthcare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NMI Holdings and HCA Healthcare
The main advantage of trading using opposite NMI Holdings and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.NMI Holdings vs. Nufarm Limited | NMI Holdings vs. AVITA Medical | NMI Holdings vs. Sterling Construction | NMI Holdings vs. Avanos Medical |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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