Correlation Between Warner Music and M/I Homes
Can any of the company-specific risk be diversified away by investing in both Warner Music and M/I 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 Warner Music and M/I Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Music Group and MI Homes, you can compare the effects of market volatilities on Warner Music and M/I 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 Warner Music with a short position of M/I Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and M/I Homes.
Diversification Opportunities for Warner Music and M/I Homes
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Warner and M/I is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M/I Homes and Warner Music 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 Warner Music Group are associated (or correlated) with M/I Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M/I Homes has no effect on the direction of Warner Music i.e., Warner Music and M/I Homes go up and down completely randomly.
Pair Corralation between Warner Music and M/I Homes
Assuming the 90 days horizon Warner Music Group is expected to generate 0.93 times more return on investment than M/I Homes. However, Warner Music Group is 1.08 times less risky than M/I Homes. It trades about 0.06 of its potential returns per unit of risk. MI Homes is currently generating about -0.26 per unit of risk. If you would invest 3,060 in Warner Music Group on December 1, 2024 and sell it today you would earn a total of 182.00 from holding Warner Music Group or generate 5.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Warner Music Group vs. MI Homes
Performance |
Timeline |
Warner Music Group |
M/I Homes |
Warner Music and M/I Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Warner Music and M/I Homes
The main advantage of trading using opposite Warner Music and M/I Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, M/I 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 M/I Homes will offset losses from the drop in M/I Homes' long position.Warner Music vs. WESANA HEALTH HOLD | Warner Music vs. PLAYMATES TOYS | Warner Music vs. MPH Health Care | Warner Music vs. Phibro Animal Health |
M/I Homes vs. East Africa Metals | M/I Homes vs. Fevertree Drinks PLC | M/I Homes vs. Sportsmans Warehouse Holdings | M/I Homes vs. JD SPORTS FASH |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Stocks Directory Find actively traded stocks across global markets |