Correlation Between Public Storage and M/I Homes
Can any of the company-specific risk be diversified away by investing in both Public Storage and M/I 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 Public Storage and M/I Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and MI Homes, you can compare the effects of market volatilities on Public Storage and M/I 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 Public Storage with a short position of M/I Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and M/I Homes.
Diversification Opportunities for Public Storage and M/I Homes
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Public and M/I is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M/I Homes and Public Storage 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 Public Storage are associated (or correlated) with M/I Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M/I Homes has no effect on the direction of Public Storage i.e., Public Storage and M/I Homes go up and down completely randomly.
Pair Corralation between Public Storage and M/I Homes
Assuming the 90 days horizon Public Storage is expected to under-perform the M/I Homes. But the stock apears to be less risky and, when comparing its historical volatility, Public Storage is 1.72 times less risky than M/I Homes. The stock trades about -0.05 of its potential returns per unit of risk. The MI Homes is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 15,160 in MI Homes on September 13, 2024 and sell it today you would lose (195.00) from holding MI Homes or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Storage vs. MI Homes
Performance |
| Timeline |
| Public Storage |
| M/I Homes |
Public Storage and M/I Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and M/I Homes
The main advantage of trading using opposite Public Storage and M/I Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, M/I 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 M/I Homes will offset losses from the drop in M/I Homes' long position.| Public Storage vs. Prologis | Public Storage vs. Yara International ASA | Public Storage vs. Ascendas Real Estate | Public Storage vs. STAG Industrial |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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