Correlation Between American Homes and MT Bank
Can any of the company-specific risk be diversified away by investing in both American Homes and MT Bank 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 American Homes and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and MT Bank Corp, you can compare the effects of market volatilities on American Homes and MT Bank 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 American Homes with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and MT Bank.
Diversification Opportunities for American Homes and MT Bank
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and 0JW2 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and American 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 American Homes 4 are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of American Homes i.e., American Homes and MT Bank go up and down completely randomly.
Pair Corralation between American Homes and MT Bank
Assuming the 90 days trading horizon American Homes 4 is expected to under-perform the MT Bank. But the stock apears to be less risky and, when comparing its historical volatility, American Homes 4 is 1.77 times less risky than MT Bank. The stock trades about -0.01 of its potential returns per unit of risk. The MT Bank Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 19,667 in MT Bank Corp on August 27, 2024 and sell it today you would earn a total of 2,637 from holding MT Bank Corp or generate 13.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. MT Bank Corp
Performance |
| Timeline |
| American Homes 4 |
| MT Bank Corp |
American Homes and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and MT Bank
The main advantage of trading using opposite American Homes and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.| American Homes vs. Samsung Electronics Co | American Homes vs. Samsung Electronics Co | American Homes vs. Hyundai Motor | American Homes vs. Toyota Motor Corp |
| MT Bank vs. American Homes 4 | MT Bank vs. Monster Beverage Corp | MT Bank vs. Zoom Video Communications | MT Bank vs. Batm Advanced Communications |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |