Correlation Between M/I Homes and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both M/I Homes and Eidesvik Offshore 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 Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and Eidesvik Offshore ASA, you can compare the effects of market volatilities on M/I Homes and Eidesvik Offshore 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 Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of M/I Homes and Eidesvik Offshore.
Diversification Opportunities for M/I Homes and Eidesvik Offshore
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between M/I and Eidesvik is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of M/I Homes i.e., M/I Homes and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between M/I Homes and Eidesvik Offshore
Assuming the 90 days horizon MI Homes is expected to generate 0.75 times more return on investment than Eidesvik Offshore. However, MI Homes is 1.33 times less risky than Eidesvik Offshore. It trades about 0.12 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.05 per unit of risk. If you would invest 4,300 in MI Homes on September 20, 2024 and sell it today you would earn a total of 9,980 from holding MI Homes or generate 232.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MI Homes vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| M/I Homes |
| Eidesvik Offshore ASA |
M/I Homes and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M/I Homes and Eidesvik Offshore
The main advantage of trading using opposite M/I Homes and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M/I Homes position performs unexpectedly, Eidesvik Offshore 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.| M/I Homes vs. Iridium Communications | M/I Homes vs. SBM OFFSHORE | M/I Homes vs. UNIVMUSIC GRPADR050 | M/I Homes vs. Cogent Communications Holdings |
| Eidesvik Offshore vs. Ryanair Holdings plc | Eidesvik Offshore vs. IMAGIN MEDICAL INC | Eidesvik Offshore vs. Westinghouse Air Brake | Eidesvik Offshore vs. MEDICAL FACILITIES NEW |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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