Correlation Between Better Home and Mills Music

Can any of the company-specific risk be diversified away by investing in both Better Home and Mills Music 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 Better Home and Mills Music into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Better Home Finance and Mills Music Trust, you can compare the effects of market volatilities on Better Home and Mills Music 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 Better Home with a short position of Mills Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better Home and Mills Music.

Diversification Opportunities for Better Home and Mills Music

0.43

Correlation Coefficient

Better Home  Mills Music

Very weak diversification

The 3 months correlation between Better and Mills is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Better Home Finance and Mills Music Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mills Music Trust and Better Home 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 Better Home Finance are associated (or correlated) with Mills Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mills Music Trust has no effect on the direction of Better Home i.e., Better Home and Mills Music go up and down completely randomly.

Pair Corralation between Better Home and Mills Music

Assuming the 90 days horizon Better Home Finance is expected to generate 10.84 times more return on investment than Mills Music. However, Better Home is 10.84 times more volatile than Mills Music Trust. It trades about 0.08 of its potential returns per unit of risk. Mills Music Trust is currently generating about -0.14 per unit of risk. If you would invest  11.00  in Better Home Finance on December 29, 2024 and sell it today you would lose (1.34) from holding Better Home Finance or give up 12.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.49%
Values	Daily Returns

Better Home Finance  vs.  Mills Music Trust

Better Home Finance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Better Home Finance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Better Home showed solid returns over the last few months and may actually be approaching a breakup point.

Mills Music Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mills Music Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Better Home and Mills Music

The main advantage of trading using opposite Better Home and Mills Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Better Home position performs unexpectedly, Mills Music 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 Mills Music will offset losses from the drop in Mills Music's long position.

The idea behind Better Home Finance and Mills Music Trust 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.