Correlation Between M/I Homes and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both M/I Homes and Addus HomeCare 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 Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and Addus HomeCare, you can compare the effects of market volatilities on M/I Homes and Addus HomeCare 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 Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of M/I Homes and Addus HomeCare.
Diversification Opportunities for M/I Homes and Addus HomeCare
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between M/I and Addus is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare 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 Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of M/I Homes i.e., M/I Homes and Addus HomeCare go up and down completely randomly.
Pair Corralation between M/I Homes and Addus HomeCare
Assuming the 90 days horizon MI Homes is expected to generate 1.15 times more return on investment than Addus HomeCare. However, M/I Homes is 1.15 times more volatile than Addus HomeCare. It trades about 0.1 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.04 per unit of risk. If you would invest 11,460 in MI Homes on September 1, 2024 and sell it today you would earn a total of 4,015 from holding MI Homes or generate 35.03% 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. Addus HomeCare
Performance |
| Timeline |
| M/I Homes |
| Addus HomeCare |
M/I Homes and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M/I Homes and Addus HomeCare
The main advantage of trading using opposite M/I Homes and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M/I Homes position performs unexpectedly, Addus HomeCare 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 Addus HomeCare will offset losses from the drop in Addus HomeCare's long position.| M/I Homes vs. Verizon Communications | M/I Homes vs. Allianz SE | M/I Homes vs. Onxeo SA | M/I Homes vs. Sixt SE |
| Addus HomeCare vs. Richter Gedeon Vegyszeti | Addus HomeCare vs. Charoen Pokphand Foods | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. Origin Agritech |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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