Correlation Between NMI Holdings and ICC Holdings

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

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

Diversification Opportunities for NMI Holdings and ICC Holdings

-0.58

Correlation Coefficient

NMI Holdings  ICC Holdings

Excellent diversification

The 3 months correlation between NMI and ICC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and ICC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC Holdings 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 ICC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC Holdings has no effect on the direction of NMI Holdings i.e., NMI Holdings and ICC Holdings go up and down completely randomly.

Pair Corralation between NMI Holdings and ICC Holdings

Given the investment horizon of 90 days NMI Holdings is expected to under-perform the ICC Holdings. In addition to that, NMI Holdings is 2.84 times more volatile than ICC Holdings. It trades about -0.09 of its total potential returns per unit of risk. ICC Holdings is currently generating about 0.15 per unit of volatility. If you would invest  2,301  in ICC Holdings on September 23, 2024 and sell it today you would earn a total of  85.00  from holding ICC Holdings or generate 3.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.37%
Values	Daily Returns

NMI Holdings  vs.  ICC Holdings

NMI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NMI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

ICC Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICC Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, ICC Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with NMI Holdings and ICC Holdings

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

The idea behind NMI Holdings and ICC Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.