Correlation Between Franklin Street and MI Homes
Can any of the company-specific risk be diversified away by investing in both Franklin Street 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 Franklin Street and MI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Street Properties and MI Homes, you can compare the effects of market volatilities on Franklin Street 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 Franklin Street with a short position of MI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Street and MI Homes.
Diversification Opportunities for Franklin Street and MI Homes
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and MHO is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MI Homes and Franklin Street 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 Franklin Street Properties 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 Franklin Street i.e., Franklin Street and MI Homes go up and down completely randomly.
Pair Corralation between Franklin Street and MI Homes
Considering the 90-day investment horizon Franklin Street Properties is expected to generate 1.67 times more return on investment than MI Homes. However, Franklin Street is 1.67 times more volatile than MI Homes. It trades about 0.02 of its potential returns per unit of risk. MI Homes is currently generating about -0.54 per unit of risk. If you would invest 180.00 in Franklin Street Properties on October 11, 2024 and sell it today you would earn a total of 1.00 from holding Franklin Street Properties or generate 0.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Street Properties vs. MI Homes
Performance |
Timeline |
Franklin Street Prop |
MI Homes |
Franklin Street and MI Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Street and MI Homes
The main advantage of trading using opposite Franklin Street and MI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Street 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.Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Creative Media Community | Franklin Street vs. Highwoods Properties | Franklin Street vs. Douglas Emmett |
MI Homes vs. TRI Pointe Homes | MI Homes vs. Beazer Homes USA | MI Homes vs. Century Communities | MI Homes vs. Meritage |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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