Correlation Between NMI Holdings and FOX CORP

Can any of the company-specific risk be diversified away by investing in both NMI Holdings and FOX 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 FOX 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 FOX P B, you can compare the effects of market volatilities on NMI Holdings and FOX 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 FOX CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and FOX CORP.

Diversification Opportunities for NMI Holdings and FOX CORP

-0.24

Correlation Coefficient

NMI Holdings  FOX CORP

Very good diversification

The 3 months correlation between NMI and FOX is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and FOX P B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOX 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 FOX CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOX CORP has no effect on the direction of NMI Holdings i.e., NMI Holdings and FOX CORP go up and down completely randomly.

Pair Corralation between NMI Holdings and FOX CORP

Assuming the 90 days horizon NMI Holdings is expected to generate 1.5 times less return on investment than FOX CORP. But when comparing it to its historical volatility, NMI Holdings is 1.25 times less risky than FOX CORP. It trades about 0.27 of its potential returns per unit of risk. FOX P B is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  3,520  in FOX P B on September 4, 2024 and sell it today you would earn a total of  680.00  from holding FOX P B or generate 19.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

NMI Holdings  vs.  FOX P B

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.

FOX CORP

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FOX P B are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FOX CORP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NMI Holdings and FOX CORP

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

The idea behind NMI Holdings and FOX P B 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.