Correlation Between M/I Homes and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both M/I Homes and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and NEWELL RUBBERMAID , you can compare the effects of market volatilities on M/I Homes and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of M/I Homes and NEWELL RUBBERMAID.
Diversification Opportunities for M/I Homes and NEWELL RUBBERMAID
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between M/I and NEWELL is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID 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 NEWELL RUBBERMAID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWELL RUBBERMAID has no effect on the direction of M/I Homes i.e., M/I Homes and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between M/I Homes and NEWELL RUBBERMAID
Assuming the 90 days horizon MI Homes is expected to generate 0.65 times more return on investment than NEWELL RUBBERMAID. However, MI Homes is 1.54 times less risky than NEWELL RUBBERMAID. It trades about 0.12 of its potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about 0.01 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MI Homes vs. NEWELL RUBBERMAID
Performance |
| Timeline |
| M/I Homes |
| NEWELL RUBBERMAID |
M/I Homes and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M/I Homes and NEWELL RUBBERMAID
The main advantage of trading using opposite M/I Homes and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M/I Homes position performs unexpectedly, NEWELL RUBBERMAID 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 NEWELL RUBBERMAID will offset losses from the drop in NEWELL RUBBERMAID'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 |
| NEWELL RUBBERMAID vs. Granite Construction | NEWELL RUBBERMAID vs. Sterling Construction | NEWELL RUBBERMAID vs. Titan Machinery | NEWELL RUBBERMAID vs. Cardinal Health |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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