Correlation Between TRAINLINE PLC and M/I Homes

Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC 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 TRAINLINE PLC 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 TRAINLINE PLC LS and MI Homes, you can compare the effects of market volatilities on TRAINLINE PLC 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 TRAINLINE PLC with a short position of M/I Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and M/I Homes.

Diversification Opportunities for TRAINLINE PLC and M/I Homes

-0.33

Correlation Coefficient

TRAINLINE PLC  M/I Homes

Very good diversification

The 3 months correlation between TRAINLINE and M/I is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M/I Homes and TRAINLINE PLC 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 TRAINLINE PLC LS 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 TRAINLINE PLC i.e., TRAINLINE PLC and M/I Homes go up and down completely randomly.

Pair Corralation between TRAINLINE PLC and M/I Homes

Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to under-perform the M/I Homes. In addition to that, TRAINLINE PLC is 1.27 times more volatile than MI Homes. It trades about -0.05 of its total potential returns per unit of risk. MI Homes is currently generating about 0.02 per unit of volatility. If you would invest  9,628  in MI Homes on April 23, 2025 and sell it today you would earn a total of  146.00  from holding MI Homes or generate 1.52% return on investment over 90 days.

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

TRAINLINE PLC LS  vs.  MI Homes

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAINLINE PLC LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

M/I Homes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MI Homes are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, M/I Homes is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TRAINLINE PLC and M/I Homes

The main advantage of trading using opposite TRAINLINE PLC and M/I Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC 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.

The idea behind TRAINLINE PLC LS 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.