Correlation Between M/I Homes and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both M/I Homes and INVITATION 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 M/I Homes and INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and INVITATION HOMES DL, you can compare the effects of market volatilities on M/I Homes and INVITATION 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 M/I Homes with a short position of INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of M/I Homes and INVITATION HOMES.
Diversification Opportunities for M/I Homes and INVITATION HOMES
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between M/I and INVITATION is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES and M/I Homes 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 MI Homes are associated (or correlated) with INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of M/I Homes i.e., M/I Homes and INVITATION HOMES go up and down completely randomly.
Pair Corralation between M/I Homes and INVITATION HOMES
Assuming the 90 days horizon MI Homes is expected to under-perform the INVITATION HOMES. In addition to that, M/I Homes is 1.99 times more volatile than INVITATION HOMES DL. It trades about -0.02 of its total potential returns per unit of risk. INVITATION HOMES DL is currently generating about 0.03 per unit of volatility. If you would invest 3,140 in INVITATION HOMES DL on September 13, 2024 and sell it today you would earn a total of 20.00 from holding INVITATION HOMES DL or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MI Homes vs. INVITATION HOMES DL
Performance |
| Timeline |
| M/I Homes |
| INVITATION HOMES |
M/I Homes and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M/I Homes and INVITATION HOMES
The main advantage of trading using opposite M/I Homes and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M/I Homes position performs unexpectedly, INVITATION 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.The idea behind MI Homes and INVITATION HOMES DL 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.| INVITATION HOMES vs. American Homes 4 | INVITATION HOMES vs. Superior Plus Corp | INVITATION HOMES vs. SIVERS SEMICONDUCTORS AB | INVITATION HOMES vs. NorAm Drilling AS |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |