Correlation Between MI Homes and Comstock Holding

Can any of the company-specific risk be diversified away by investing in both MI Homes and Comstock Holding 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 Comstock Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MI Homes and Comstock Holding Companies, you can compare the effects of market volatilities on MI Homes and Comstock Holding 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 Comstock Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of MI Homes and Comstock Holding.

Diversification Opportunities for MI Homes and Comstock Holding

0.6

Correlation Coefficient

MI Homes  Comstock Holding

Poor diversification

The 3 months correlation between MHO and Comstock is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and Comstock Holding Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Holding Com 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 Comstock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Holding Com has no effect on the direction of MI Homes i.e., MI Homes and Comstock Holding go up and down completely randomly.

Pair Corralation between MI Homes and Comstock Holding

Considering the 90-day investment horizon MI Homes is expected to generate 1.06 times less return on investment than Comstock Holding. But when comparing it to its historical volatility, MI Homes is 1.66 times less risky than Comstock Holding. It trades about 0.08 of its potential returns per unit of risk. Comstock Holding Companies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  444.00  in Comstock Holding Companies on October 23, 2024 and sell it today you would earn a total of  398.00  from holding Comstock Holding Companies or generate 89.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MI Homes  vs.  Comstock Holding Companies

MI Homes

Risk-Adjusted Performance

0 of 100

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 inconsistent performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Comstock Holding Com

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comstock Holding Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with MI Homes and Comstock Holding

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

The idea behind MI Homes and Comstock Holding Companies 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.