Correlation Between MI Homes and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both MI Homes and Addus HomeCare 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 Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and Addus HomeCare, you can compare the effects of market volatilities on MI Homes and Addus HomeCare 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 Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of MI Homes and Addus HomeCare.
Diversification Opportunities for MI Homes and Addus HomeCare
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MHO and Addus is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare 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 Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of MI Homes i.e., MI Homes and Addus HomeCare go up and down completely randomly.
Pair Corralation between MI Homes and Addus HomeCare
Considering the 90-day investment horizon MI Homes is expected to generate 1.13 times more return on investment than Addus HomeCare. However, MI Homes is 1.13 times more volatile than Addus HomeCare. It trades about 0.15 of its potential returns per unit of risk. Addus HomeCare is currently generating about -0.07 per unit of risk. If you would invest 15,300 in MI Homes on August 31, 2024 and sell it today you would earn a total of 1,154 from holding MI Homes or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MI Homes vs. Addus HomeCare
Performance |
| Timeline |
| MI Homes |
| Addus HomeCare |
MI Homes and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MI Homes and Addus HomeCare
The main advantage of trading using opposite MI Homes and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MI Homes position performs unexpectedly, Addus HomeCare 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 Addus HomeCare will offset losses from the drop in Addus HomeCare's long position.| MI Homes vs. Century Communities | MI Homes vs. Dream Finders Homes | MI Homes vs. DR Horton | MI Homes vs. Everus Construction Group |
| Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. Acadia Healthcare | Addus HomeCare vs. Select Medical Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |