Correlation Between MI Homes and Rite Aid

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both MI Homes and Rite Aid 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 MI Homes and Rite Aid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and Rite Aid, you can compare the effects of market volatilities on MI Homes and Rite Aid 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 MI Homes with a short position of Rite Aid. Check out your portfolio center. Please also check ongoing floating volatility patterns of MI Homes and Rite Aid.

Diversification Opportunities for MI Homes and Rite Aid

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between 4MI and Rite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and Rite Aid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rite Aid and MI 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 Rite Aid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rite Aid has no effect on the direction of MI Homes i.e., MI Homes and Rite Aid go up and down completely randomly.

Pair Corralation between MI Homes and Rite Aid

Assuming the 90 days horizon MI Homes is expected to generate 1.52 times less return on investment than Rite Aid. But when comparing it to its historical volatility, MI Homes is 2.06 times less risky than Rite Aid. It trades about 0.07 of its potential returns per unit of risk. Rite Aid is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Rite Aid on September 8, 2024 and sell it today you would earn a total of  6.00  from holding Rite Aid or generate 42.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.6%
ValuesDaily Returns

MI Homes  vs.  Rite Aid

 Performance 
       Timeline  
MI Homes 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MI Homes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MI Homes may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Rite Aid 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Rite Aid has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rite Aid is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MI Homes and Rite Aid Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MI Homes and Rite Aid

The main advantage of trading using opposite MI Homes and Rite Aid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MI Homes position performs unexpectedly, Rite Aid 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 Rite Aid will offset losses from the drop in Rite Aid's long position.
The idea behind MI Homes and Rite Aid 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.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios