Correlation Between M/I Homes and VIVA WINE
Can any of the company-specific risk be diversified away by investing in both M/I Homes and VIVA WINE 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 VIVA WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and VIVA WINE GROUP, you can compare the effects of market volatilities on M/I Homes and VIVA WINE 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 VIVA WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of M/I Homes and VIVA WINE.
Diversification Opportunities for M/I Homes and VIVA WINE
Good diversification
The 3 months correlation between M/I and VIVA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and VIVA WINE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIVA WINE GROUP 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 VIVA WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIVA WINE GROUP has no effect on the direction of M/I Homes i.e., M/I Homes and VIVA WINE go up and down completely randomly.
Pair Corralation between M/I Homes and VIVA WINE
Assuming the 90 days horizon MI Homes is expected to generate 1.71 times more return on investment than VIVA WINE. However, M/I Homes is 1.71 times more volatile than VIVA WINE GROUP. It trades about 0.22 of its potential returns per unit of risk. VIVA WINE GROUP is currently generating about -0.19 per unit of risk. If you would invest 13,755 in MI Homes on September 5, 2024 and sell it today you would earn a total of 1,845 from holding MI Homes or generate 13.41% 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. VIVA WINE GROUP
Performance |
| Timeline |
| M/I Homes |
| VIVA WINE GROUP |
M/I Homes and VIVA WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M/I Homes and VIVA WINE
The main advantage of trading using opposite M/I Homes and VIVA WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M/I Homes position performs unexpectedly, VIVA WINE 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 VIVA WINE will offset losses from the drop in VIVA WINE's long position.The idea behind MI Homes and VIVA WINE GROUP 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.| VIVA WINE vs. Charter Communications | VIVA WINE vs. Chunghwa Telecom Co | VIVA WINE vs. Harmony Gold Mining | VIVA WINE vs. Spirent Communications 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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