Correlation Between NMI Holdings and Papa Johns
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Papa Johns 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 Papa Johns into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Papa Johns International, you can compare the effects of market volatilities on NMI Holdings and Papa Johns 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 Papa Johns. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Papa Johns.
Diversification Opportunities for NMI Holdings and Papa Johns
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and Papa is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Papa Johns International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papa Johns International 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 Papa Johns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papa Johns International has no effect on the direction of NMI Holdings i.e., NMI Holdings and Papa Johns go up and down completely randomly.
Pair Corralation between NMI Holdings and Papa Johns
Assuming the 90 days horizon NMI Holdings is expected to generate 0.64 times more return on investment than Papa Johns. However, NMI Holdings is 1.56 times less risky than Papa Johns. It trades about 0.09 of its potential returns per unit of risk. Papa Johns International is currently generating about -0.03 per unit of risk. If you would invest 2,400 in NMI Holdings on August 28, 2024 and sell it today you would earn a total of 1,240 from holding NMI Holdings or generate 51.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
NMI Holdings vs. Papa Johns International
Performance |
| Timeline |
| NMI Holdings |
| Papa Johns International |
NMI Holdings and Papa Johns Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Papa Johns
The main advantage of trading using opposite NMI Holdings and Papa Johns positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Papa Johns 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 Papa Johns will offset losses from the drop in Papa Johns' long position.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
| Papa Johns vs. Superior Plus Corp | Papa Johns vs. NMI Holdings | Papa Johns vs. Origin Agritech | Papa Johns vs. SIVERS SEMICONDUCTORS AB |
Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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