Correlation Between CDW Corp and MI Homes
Can any of the company-specific risk be diversified away by investing in both CDW Corp and MI Homes 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 CDW Corp and MI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and MI Homes, you can compare the effects of market volatilities on CDW Corp and MI Homes 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 CDW Corp with a short position of MI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and MI Homes.
Diversification Opportunities for CDW Corp and MI Homes
Very weak diversification
The 3 months correlation between CDW and MHO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MI Homes and CDW Corp 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 CDW Corp are associated (or correlated) with MI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MI Homes has no effect on the direction of CDW Corp i.e., CDW Corp and MI Homes go up and down completely randomly.
Pair Corralation between CDW Corp and MI Homes
Considering the 90-day investment horizon CDW Corp is expected to under-perform the MI Homes. In addition to that, CDW Corp is 1.26 times more volatile than MI Homes. It trades about -0.26 of its total potential returns per unit of risk. MI Homes is currently generating about 0.11 per unit of volatility. If you would invest 16,024 in MI Homes on August 28, 2024 and sell it today you would earn a total of 890.00 from holding MI Homes or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. MI Homes
Performance |
| Timeline |
| CDW Corp |
| MI Homes |
CDW Corp and MI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and MI Homes
The main advantage of trading using opposite CDW Corp and MI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, MI Homes 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 MI Homes will offset losses from the drop in MI Homes' long position.| CDW Corp vs. Plexus Corp | CDW Corp vs. Jabil Circuit | CDW Corp vs. Sanmina | CDW Corp vs. Methode Electronics |
| MI Homes vs. Arhaus Inc | MI Homes vs. Floor Decor Holdings | MI Homes vs. Kingfisher plc | MI Homes vs. Haverty Furniture Companies |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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