Correlation Between NMI Holdings and ACMAT Corp

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

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

Diversification Opportunities for NMI Holdings and ACMAT Corp

0.0

Correlation Coefficient

NMI Holdings  ACMAT Corp

Pay attention - limited upside

The 3 months correlation between NMI and ACMAT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and ACMAT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACMAT Corp 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 ACMAT Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACMAT Corp has no effect on the direction of NMI Holdings i.e., NMI Holdings and ACMAT Corp go up and down completely randomly.

Pair Corralation between NMI Holdings and ACMAT Corp

If you would invest  3,030  in NMI Holdings on February 28, 2024 and sell it today you would earn a total of  228.00  from holding NMI Holdings or generate 7.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

NMI Holdings  vs.  ACMAT Corp

NMI Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NMI Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, NMI Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

ACMAT Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACMAT Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ACMAT Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NMI Holdings and ACMAT Corp

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

The idea behind NMI Holdings and ACMAT Corp 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.