Correlation Between M/I Homes and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both M/I Homes and Advanced Medical 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 Advanced Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and Advanced Medical Solutions, you can compare the effects of market volatilities on M/I Homes and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of M/I Homes and Advanced Medical.
Diversification Opportunities for M/I Homes and Advanced Medical
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between M/I and Advanced is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of M/I Homes i.e., M/I Homes and Advanced Medical go up and down completely randomly.
Pair Corralation between M/I Homes and Advanced Medical
Assuming the 90 days horizon MI Homes is expected to generate 0.89 times more return on investment than Advanced Medical. However, MI Homes is 1.13 times less risky than Advanced Medical. It trades about 0.2 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about -0.03 per unit of risk. If you would invest 13,850 in MI Homes on September 1, 2024 and sell it today you would earn a total of 1,625 from holding MI Homes or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MI Homes vs. Advanced Medical Solutions
Performance |
| Timeline |
| M/I Homes |
| Advanced Medical Sol |
M/I Homes and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M/I Homes and Advanced Medical
The main advantage of trading using opposite M/I Homes and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M/I Homes position performs unexpectedly, Advanced Medical 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 Advanced Medical will offset losses from the drop in Advanced Medical'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 |
| Advanced Medical vs. CHINA TONTINE WINES | Advanced Medical vs. ASURE SOFTWARE | Advanced Medical vs. Sixt Leasing SE | Advanced Medical vs. ATOSS SOFTWARE |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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