Correlation Between MI Homes and Coca Cola
Can any of the company-specific risk be diversified away by investing in both MI Homes and Coca Cola 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 Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and The Coca Cola, you can compare the effects of market volatilities on MI Homes and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of MI Homes and Coca Cola.
Diversification Opportunities for MI Homes and Coca Cola
Very weak diversification
The 3 months correlation between MHO and Coca is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of MI Homes i.e., MI Homes and Coca Cola go up and down completely randomly.
Pair Corralation between MI Homes and Coca Cola
Considering the 90-day investment horizon MI Homes is expected to generate 2.93 times more return on investment than Coca Cola. However, MI Homes is 2.93 times more volatile than The Coca Cola. It trades about 0.1 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.04 per unit of risk. If you would invest 7,533 in MI Homes on August 31, 2024 and sell it today you would earn a total of 8,970 from holding MI Homes or generate 119.08% 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. The Coca Cola
Performance |
| Timeline |
| MI Homes |
| Coca Cola |
MI Homes and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MI Homes and Coca Cola
The main advantage of trading using opposite MI Homes and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MI Homes position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola'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 |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. RLJ Lodging Trust | Coca Cola vs. Aquagold International | Coca Cola vs. Stepstone Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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