Correlation Between American Homes and Schweiter Technologies
Can any of the company-specific risk be diversified away by investing in both American Homes and Schweiter Technologies 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 Schweiter Technologies 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 Schweiter Technologies AG, you can compare the effects of market volatilities on American Homes and Schweiter Technologies 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 Schweiter Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Schweiter Technologies.
Diversification Opportunities for American Homes and Schweiter Technologies
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Schweiter is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of American Homes i.e., American Homes and Schweiter Technologies go up and down completely randomly.
Pair Corralation between American Homes and Schweiter Technologies
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.63 times more return on investment than Schweiter Technologies. However, American Homes 4 is 1.58 times less risky than Schweiter Technologies. It trades about 0.05 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about -0.03 per unit of risk. If you would invest 3,374 in American Homes 4 on September 2, 2024 and sell it today you would earn a total of 485.00 from holding American Homes 4 or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Homes 4 vs. Schweiter Technologies AG
Performance |
| Timeline |
| American Homes 4 |
| Schweiter Technologies |
American Homes and Schweiter Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Schweiter Technologies
The main advantage of trading using opposite American Homes and Schweiter Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Schweiter Technologies 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 Schweiter Technologies will offset losses from the drop in Schweiter Technologies' long position.| American Homes vs. Gaztransport et Technigaz | American Homes vs. Fevertree Drinks Plc | American Homes vs. Samsung Electronics Co | American Homes vs. Molson Coors Beverage |
| Schweiter Technologies vs. Charter Communications Cl | Schweiter Technologies vs. Naturhouse Health SA | Schweiter Technologies vs. Aeorema Communications Plc | Schweiter Technologies vs. Abingdon Health Plc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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