Correlation Between PulteGroup and MI Homes

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both PulteGroup 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 PulteGroup and MI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PulteGroup and MI Homes, you can compare the effects of market volatilities on PulteGroup 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 PulteGroup with a short position of MI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of PulteGroup and MI Homes.

Diversification Opportunities for PulteGroup and MI Homes

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between PulteGroup and MHO is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding PulteGroup and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MI Homes and PulteGroup 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 PulteGroup 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 PulteGroup i.e., PulteGroup and MI Homes go up and down completely randomly.

Pair Corralation between PulteGroup and MI Homes

Considering the 90-day investment horizon PulteGroup is expected to generate 1.1 times less return on investment than MI Homes. But when comparing it to its historical volatility, PulteGroup is 1.16 times less risky than MI Homes. It trades about 0.11 of its potential returns per unit of risk. MI Homes is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,144  in MI Homes on December 29, 2023 and sell it today you would earn a total of  9,485  from holding MI Homes or generate 228.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

PulteGroup  vs.  MI Homes

 Performance 
       Timeline  
PulteGroup 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in PulteGroup are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical indicators, PulteGroup displayed solid returns over the last few months and may actually be approaching a breakup point.
MI Homes 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days MI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, MI Homes is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

PulteGroup and MI Homes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PulteGroup and MI Homes

The main advantage of trading using opposite PulteGroup and MI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PulteGroup 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.
The idea behind PulteGroup and MI Homes 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 the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

Other Complementary Tools

Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Share Portfolio
Track or share privately all of your investments from the convenience of any device
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like