Correlation Between MI Homes and Beazer Homes

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Can any of the company-specific risk be diversified away by investing in both MI Homes and Beazer 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 MI Homes and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MI Homes and Beazer Homes USA, you can compare the effects of market volatilities on MI Homes and Beazer 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 MI Homes with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of MI Homes and Beazer Homes.

Diversification Opportunities for MI Homes and Beazer Homes

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between MI Homes and Beazer is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA 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 Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of MI Homes i.e., MI Homes and Beazer Homes go up and down completely randomly.

Pair Corralation between MI Homes and Beazer Homes

Considering the 90-day investment horizon MI Homes is expected to generate 0.78 times more return on investment than Beazer Homes. However, MI Homes is 1.28 times less risky than Beazer Homes. It trades about -0.06 of its potential returns per unit of risk. Beazer Homes USA is currently generating about -0.09 per unit of risk. If you would invest  4,507  in MI Homes on March 26, 2022 and sell it today you would lose (506.00)  from holding MI Homes or give up 11.23% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

MI Homes  vs.  Beazer Homes USA

 Performance (%) 
      Timeline 
MI Homes 
MI Homes Performance
0 of 100
Over the last 90 days MI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Structure and Payout Changes

Last Split Factor
2:1
Ex Dividend Date
2008-06-27
Last Split Date
2002-06-20

MI Homes Price Channel

Beazer Homes USA 
Beazer Performance
0 of 100
Over the last 90 days Beazer Homes USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Beazer Price Channel

MI Homes and Beazer Homes Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with MI Homes and Beazer Homes

The main advantage of trading using opposite MI Homes and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MI Homes position performs unexpectedly, Beazer 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 Beazer Homes will offset losses from the drop in Beazer Homes' long position.
The idea behind MI Homes and Beazer Homes USA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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