Correlation Between NMI Holdings and Research Alliance

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

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

Diversification Opportunities for NMI Holdings and Research Alliance

-0.2

Correlation Coefficient

NMI Holdings  Research Alliance

Good diversification

The 3 months correlation between NMI and Research is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Research Alliance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Research Alliance 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 Research Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Research Alliance Corp has no effect on the direction of NMI Holdings i.e., NMI Holdings and Research Alliance go up and down completely randomly.

Pair Corralation between NMI Holdings and Research Alliance

If you would invest  2,929  in NMI Holdings on February 26, 2024 and sell it today you would earn a total of  341.00  from holding NMI Holdings or generate 11.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

NMI Holdings  vs.  Research Alliance Corp

NMI Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NMI Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, NMI Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Research Alliance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NMI Holdings and Research Alliance

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

The idea behind NMI Holdings and Research Alliance 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.