Correlation Between NMI Holdings and PUMA SE

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

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

Diversification Opportunities for NMI Holdings and PUMA SE

0.46

Correlation Coefficient

NMI Holdings  PUMA SE

Very weak diversification

The 3 months correlation between NMI and PUMA is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and PUMA SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PUMA SE 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 PUMA SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PUMA SE has no effect on the direction of NMI Holdings i.e., NMI Holdings and PUMA SE go up and down completely randomly.

Pair Corralation between NMI Holdings and PUMA SE

Assuming the 90 days horizon NMI Holdings is expected to generate 0.44 times more return on investment than PUMA SE. However, NMI Holdings is 2.3 times less risky than PUMA SE. It trades about -0.06 of its potential returns per unit of risk. PUMA SE is currently generating about -0.25 per unit of risk. If you would invest  3,560  in NMI Holdings on December 26, 2024 and sell it today you would lose (240.00) from holding NMI Holdings or give up 6.74% of portfolio value over 90 days.

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

NMI Holdings  vs.  PUMA SE

NMI Holdings

Risk-Adjusted Performance

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 basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PUMA SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days PUMA SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NMI Holdings and PUMA SE

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

The idea behind NMI Holdings and PUMA SE 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.