Correlation Between MI Homes and Employers Holdings
Can any of the company-specific risk be diversified away by investing in both MI Homes and Employers Holdings 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 Employers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and Employers Holdings, you can compare the effects of market volatilities on MI Homes and Employers Holdings 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 Employers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MI Homes and Employers Holdings.
Diversification Opportunities for MI Homes and Employers Holdings
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between MHO and Employers is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and Employers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Employers Holdings 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 Employers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Employers Holdings has no effect on the direction of MI Homes i.e., MI Homes and Employers Holdings go up and down completely randomly.
Pair Corralation between MI Homes and Employers Holdings
Considering the 90-day investment horizon MI Homes is expected to under-perform the Employers Holdings. In addition to that, MI Homes is 3.21 times more volatile than Employers Holdings. It trades about -0.09 of its total potential returns per unit of risk. Employers Holdings is currently generating about -0.21 per unit of volatility. If you would invest 5,359 in Employers Holdings on September 12, 2024 and sell it today you would lose (165.00) from holding Employers Holdings or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MI Homes vs. Employers Holdings
Performance |
| Timeline |
| MI Homes |
| Employers Holdings |
MI Homes and Employers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MI Homes and Employers Holdings
The main advantage of trading using opposite MI Homes and Employers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MI Homes position performs unexpectedly, Employers Holdings 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 Employers Holdings will offset losses from the drop in Employers Holdings' long position.| MI Homes vs. TRI Pointe Homes | MI Homes vs. Beazer Homes USA | MI Homes vs. Century Communities | MI Homes vs. Meritage |
| Employers Holdings vs. First American | Employers Holdings vs. Assurant | Employers Holdings vs. NMI Holdings | Employers Holdings vs. MGIC Investment Corp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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