Correlation Between FEMALE HEALTH and M/I Homes

Can any of the company-specific risk be diversified away by investing in both FEMALE HEALTH and M/I Homes 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 FEMALE HEALTH and M/I Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FEMALE HEALTH and MI Homes, you can compare the effects of market volatilities on FEMALE HEALTH and M/I Homes 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 FEMALE HEALTH with a short position of M/I Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of FEMALE HEALTH and M/I Homes.

Diversification Opportunities for FEMALE HEALTH and M/I Homes

0.22

Correlation Coefficient

FEMALE HEALTH  M/I Homes

Modest diversification

The 3 months correlation between FEMALE and M/I is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding FEMALE HEALTH and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M/I Homes and FEMALE HEALTH 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 FEMALE HEALTH are associated (or correlated) with M/I Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M/I Homes has no effect on the direction of FEMALE HEALTH i.e., FEMALE HEALTH and M/I Homes go up and down completely randomly.

Pair Corralation between FEMALE HEALTH and M/I Homes

Assuming the 90 days trading horizon FEMALE HEALTH is expected to under-perform the M/I Homes. In addition to that, FEMALE HEALTH is 1.82 times more volatile than MI Homes. It trades about -0.03 of its total potential returns per unit of risk. MI Homes is currently generating about -0.06 per unit of volatility. If you would invest  15,125  in MI Homes on September 22, 2024 and sell it today you would lose (1,550) from holding MI Homes or give up 10.25% of portfolio value over 90 days.

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

FEMALE HEALTH  vs.  MI Homes

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

M/I Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

Pair Trading with FEMALE HEALTH and M/I Homes

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

The idea behind FEMALE HEALTH and MI Homes 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.