Correlation Between M/I Homes and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both M/I Homes and Sunny Optical 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 Sunny Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and Sunny Optical Technology, you can compare the effects of market volatilities on M/I Homes and Sunny Optical 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 Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of M/I Homes and Sunny Optical.
Diversification Opportunities for M/I Homes and Sunny Optical
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between M/I and Sunny is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of M/I Homes i.e., M/I Homes and Sunny Optical go up and down completely randomly.
Pair Corralation between M/I Homes and Sunny Optical
Assuming the 90 days horizon MI Homes is expected to generate 0.64 times more return on investment than Sunny Optical. However, MI Homes is 1.55 times less risky than Sunny Optical. It trades about 0.1 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.01 per unit of risk. If you would invest 7,050 in MI Homes on August 31, 2024 and sell it today you would earn a total of 8,425 from holding MI Homes or generate 119.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
MI Homes vs. Sunny Optical Technology
Performance |
| Timeline |
| M/I Homes |
| Sunny Optical Technology |
M/I Homes and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M/I Homes and Sunny Optical
The main advantage of trading using opposite M/I Homes and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M/I Homes position performs unexpectedly, Sunny Optical 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 Sunny Optical will offset losses from the drop in Sunny Optical's long position.| M/I Homes vs. Siamgas And Petrochemicals | M/I Homes vs. HOCHSCHILD MINING | M/I Homes vs. GAMING FAC SA | M/I Homes vs. OURGAME INTHOLDL 00005 |
| Sunny Optical vs. ULTRA CLEAN HLDGS | Sunny Optical vs. USWE SPORTS AB | Sunny Optical vs. Universal Display | Sunny Optical vs. Treasury Wine Estates |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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