Correlation Between Carmat SA and M/I Homes
Can any of the company-specific risk be diversified away by investing in both Carmat SA and M/I 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 Carmat SA and M/I Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmat SA and MI Homes, you can compare the effects of market volatilities on Carmat SA and M/I 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 Carmat SA with a short position of M/I Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmat SA and M/I Homes.
Diversification Opportunities for Carmat SA and M/I Homes
Excellent diversification
The 3 months correlation between Carmat and M/I is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Carmat SA and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M/I Homes and Carmat SA 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 Carmat SA are associated (or correlated) with M/I Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M/I Homes has no effect on the direction of Carmat SA i.e., Carmat SA and M/I Homes go up and down completely randomly.
Pair Corralation between Carmat SA and M/I Homes
Assuming the 90 days horizon Carmat SA is expected to under-perform the M/I Homes. In addition to that, Carmat SA is 1.71 times more volatile than MI Homes. It trades about -0.21 of its total potential returns per unit of risk. MI Homes is currently generating about 0.2 per unit of volatility. If you would invest 13,850 in MI Homes on September 1, 2024 and sell it today you would earn a total of 1,625 from holding MI Homes or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Carmat SA vs. MI Homes
Performance |
| Timeline |
| Carmat SA |
| M/I Homes |
Carmat SA and M/I Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmat SA and M/I Homes
The main advantage of trading using opposite Carmat SA and M/I Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmat SA position performs unexpectedly, M/I 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 M/I Homes will offset losses from the drop in M/I Homes' long position.| Carmat SA vs. National Retail Properties | Carmat SA vs. Sunstone Hotel Investors | Carmat SA vs. CARSALESCOM | Carmat SA vs. FAST RETAIL ADR |
| M/I Homes vs. Verizon Communications | M/I Homes vs. Allianz SE | M/I Homes vs. Onxeo SA | M/I Homes vs. Sixt SE |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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