Correlation Between MI Homes and RMG Acquisition
Can any of the company-specific risk be diversified away by investing in both MI Homes and RMG Acquisition 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 RMG Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and RMG Acquisition Corp, you can compare the effects of market volatilities on MI Homes and RMG Acquisition 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 RMG Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of MI Homes and RMG Acquisition.
Diversification Opportunities for MI Homes and RMG Acquisition
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between MHO and RMG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and RMG Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMG Acquisition Corp 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 RMG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMG Acquisition Corp has no effect on the direction of MI Homes i.e., MI Homes and RMG Acquisition go up and down completely randomly.
Pair Corralation between MI Homes and RMG Acquisition
Considering the 90-day investment horizon MI Homes is expected to generate 1.94 times more return on investment than RMG Acquisition. However, MI Homes is 1.94 times more volatile than RMG Acquisition Corp. It trades about 0.12 of its potential returns per unit of risk. RMG Acquisition Corp is currently generating about -0.01 per unit of risk. If you would invest 4,655 in MI Homes on September 4, 2024 and sell it today you would earn a total of 12,034 from holding MI Homes or generate 258.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.17% |
| Values | Daily Returns |
MI Homes vs. RMG Acquisition Corp
Performance |
| Timeline |
| MI Homes |
| RMG Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MI Homes and RMG Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MI Homes and RMG Acquisition
The main advantage of trading using opposite MI Homes and RMG Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MI Homes position performs unexpectedly, RMG Acquisition 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 RMG Acquisition will offset losses from the drop in RMG Acquisition's long position.| MI Homes vs. TRI Pointe Homes | MI Homes vs. Beazer Homes USA | MI Homes vs. Century Communities | MI Homes vs. Meritage |
| RMG Acquisition vs. Addus HomeCare | RMG Acquisition vs. Alta Equipment Group | RMG Acquisition vs. Kaiser Aluminum | RMG Acquisition 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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