Correlation Between M/I Homes and Quaker Chemical

Can any of the company-specific risk be diversified away by investing in both M/I Homes and Quaker Chemical 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 M/I Homes and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MI Homes and Quaker Chemical, you can compare the effects of market volatilities on M/I Homes and Quaker Chemical 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 M/I Homes with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of M/I Homes and Quaker Chemical.

Diversification Opportunities for M/I Homes and Quaker Chemical

0.52

Correlation Coefficient

M/I Homes  Quaker Chemical

Very weak diversification

The 3 months correlation between M/I and Quaker is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding MI Homes and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and M/I 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of M/I Homes i.e., M/I Homes and Quaker Chemical go up and down completely randomly.

Pair Corralation between M/I Homes and Quaker Chemical

Assuming the 90 days horizon M/I Homes is expected to generate 1.84 times less return on investment than Quaker Chemical. But when comparing it to its historical volatility, MI Homes is 1.14 times less risky than Quaker Chemical. It trades about 0.08 of its potential returns per unit of risk. Quaker Chemical is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8,615  in Quaker Chemical on April 20, 2025 and sell it today you would earn a total of  1,785  from holding Quaker Chemical or generate 20.72% return on investment over 90 days.

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

MI Homes  vs.  Quaker Chemical

M/I Homes

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MI Homes are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, M/I Homes may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Quaker Chemical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quaker Chemical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Quaker Chemical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with M/I Homes and Quaker Chemical

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

The idea behind MI Homes and Quaker Chemical 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.