Correlation Between Philip Morris and M/I Homes
Can any of the company-specific risk be diversified away by investing in both Philip Morris 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 Philip Morris 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 Philip Morris International and MI Homes, you can compare the effects of market volatilities on Philip Morris 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 Philip Morris with a short position of M/I Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and M/I Homes.
Diversification Opportunities for Philip Morris and M/I Homes
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Philip and M/I is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M/I Homes and Philip Morris 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 Philip Morris International 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 Philip Morris i.e., Philip Morris and M/I Homes go up and down completely randomly.
Pair Corralation between Philip Morris and M/I Homes
Assuming the 90 days horizon Philip Morris is expected to generate 3.13 times less return on investment than M/I Homes. But when comparing it to its historical volatility, Philip Morris International is 1.97 times less risky than M/I Homes. It trades about 0.07 of its potential returns per unit of risk. MI Homes is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,880 in MI Homes on September 3, 2024 and sell it today you would earn a total of 10,720 from holding MI Homes or generate 219.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Philip Morris International vs. MI Homes
Performance |
| Timeline |
| Philip Morris Intern |
| M/I Homes |
Philip Morris and M/I Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Philip Morris and M/I Homes
The main advantage of trading using opposite Philip Morris and M/I Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris 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.| Philip Morris vs. British American Tobacco | Philip Morris vs. JAPAN TOBACCO UNSPADR12 | Philip Morris vs. Imperial Brands PLC |
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 Stocks Directory module to find actively traded stocks across global markets.
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