Correlation Between Postal Realty and MI Homes
Can any of the company-specific risk be diversified away by investing in both Postal Realty and MI 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 Postal Realty and MI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Realty Trust and MI Homes, you can compare the effects of market volatilities on Postal Realty and MI 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 Postal Realty with a short position of MI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Realty and MI Homes.
Diversification Opportunities for Postal Realty and MI Homes
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Postal and MHO is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Postal Realty Trust and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MI Homes and Postal Realty 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 Postal Realty Trust are associated (or correlated) with MI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MI Homes has no effect on the direction of Postal Realty i.e., Postal Realty and MI Homes go up and down completely randomly.
Pair Corralation between Postal Realty and MI Homes
Given the investment horizon of 90 days Postal Realty Trust is expected to under-perform the MI Homes. But the stock apears to be less risky and, when comparing its historical volatility, Postal Realty Trust is 2.0 times less risky than MI Homes. The stock trades about -0.08 of its potential returns per unit of risk. The MI Homes is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16,024 in MI Homes on August 29, 2024 and sell it today you would earn a total of 488.00 from holding MI Homes or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postal Realty Trust vs. MI Homes
Performance |
| Timeline |
| Postal Realty Trust |
| MI Homes |
Postal Realty and MI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Realty and MI Homes
The main advantage of trading using opposite Postal Realty and MI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Realty position performs unexpectedly, MI 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 MI Homes will offset losses from the drop in MI Homes' long position.| Postal Realty vs. Office Properties Income | Postal Realty vs. Boston Properties | Postal Realty vs. SL Green Realty | Postal Realty vs. Alexandria Real Estate |
| MI Homes vs. Arhaus Inc | MI Homes vs. Floor Decor Holdings | MI Homes vs. Haverty Furniture Companies | MI Homes vs. Kingfisher plc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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