Correlation Between HubSpot and NMI Holdings

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

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

Diversification Opportunities for HubSpot and NMI Holdings

-0.26

Correlation Coefficient

HubSpot  NMI Holdings

Very good diversification

The 3 months correlation between HubSpot and NMI is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding HubSpot and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and HubSpot 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 HubSpot are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of HubSpot i.e., HubSpot and NMI Holdings go up and down completely randomly.

Pair Corralation between HubSpot and NMI Holdings

Assuming the 90 days horizon HubSpot is expected to generate 1.33 times more return on investment than NMI Holdings. However, HubSpot is 1.33 times more volatile than NMI Holdings. It trades about 0.29 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.03 per unit of risk. If you would invest  44,820  in HubSpot on September 1, 2024 and sell it today you would earn a total of  23,260  from holding HubSpot or generate 51.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

HubSpot  vs.  NMI Holdings

HubSpot

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HubSpot are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HubSpot reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with HubSpot and NMI Holdings

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

The idea behind HubSpot and NMI 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..