Correlation Between American Homes and Concurrent Technologies
Can any of the company-specific risk be diversified away by investing in both American Homes and Concurrent 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 Concurrent 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 Concurrent Technologies Plc, you can compare the effects of market volatilities on American Homes and Concurrent 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 Concurrent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Concurrent Technologies.
Diversification Opportunities for American Homes and Concurrent Technologies
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Concurrent is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Concurrent Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concurrent 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 Concurrent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concurrent Technologies has no effect on the direction of American Homes i.e., American Homes and Concurrent Technologies go up and down completely randomly.
Pair Corralation between American Homes and Concurrent Technologies
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.54 times more return on investment than Concurrent Technologies. However, American Homes 4 is 1.85 times less risky than Concurrent Technologies. It trades about -0.04 of its potential returns per unit of risk. Concurrent Technologies Plc is currently generating about -0.21 per unit of risk. If you would invest 3,537 in American Homes 4 on November 29, 2024 and sell it today you would lose (38.00) from holding American Homes 4 or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Homes 4 vs. Concurrent Technologies Plc
Performance |
| Timeline |
| American Homes 4 |
| Concurrent Technologies |
American Homes and Concurrent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Concurrent Technologies
The main advantage of trading using opposite American Homes and Concurrent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Concurrent 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 Concurrent Technologies will offset losses from the drop in Concurrent Technologies' long position.| American Homes vs. Fevertree Drinks Plc | American Homes vs. Martin Marietta Materials | American Homes vs. Tatton Asset Management | American Homes vs. Vulcan Materials Co |
| Concurrent Technologies vs. Broadcom | Concurrent Technologies vs. Fevertree Drinks Plc | Concurrent Technologies vs. Kaufman Et Broad | Concurrent Technologies vs. Grieg Seafood |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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