Correlation Between NMI Holdings and Vastned Retail

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

By analyzing existing cross correlation between NMI Holdings and Vastned Retail NV, you can compare the effects of market volatilities on NMI Holdings and Vastned Retail 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 Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Vastned Retail.

Diversification Opportunities for NMI Holdings and Vastned Retail

-0.19

Correlation Coefficient

NMI Holdings  Vastned Retail

Good diversification

The 3 months correlation between NMI and Vastned is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail NV 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 Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of NMI Holdings i.e., NMI Holdings and Vastned Retail go up and down completely randomly.

Pair Corralation between NMI Holdings and Vastned Retail

Assuming the 90 days horizon NMI Holdings is expected to generate 2.46 times more return on investment than Vastned Retail. However, NMI Holdings is 2.46 times more volatile than Vastned Retail NV. It trades about 0.03 of its potential returns per unit of risk. Vastned Retail NV is currently generating about 0.06 per unit of risk. If you would invest  3,700  in NMI Holdings on August 31, 2024 and sell it today you would earn a total of  80.00  from holding NMI Holdings or generate 2.16% return on investment over 90 days.

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

NMI Holdings  vs.  Vastned Retail NV

NMI Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NMI Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Vastned Retail NV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vastned Retail NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NMI Holdings and Vastned Retail

The main advantage of trading using opposite NMI Holdings and Vastned Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Vastned Retail 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 Vastned Retail will offset losses from the drop in Vastned Retail's long position.

The idea behind NMI Holdings and Vastned Retail NV 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 Transaction History module to view history of all your transactions and understand their impact on performance.