Correlation Between American Homes and Intuitive Investments
Can any of the company-specific risk be diversified away by investing in both American Homes and Intuitive Investments 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 Intuitive Investments 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 Intuitive Investments Group, you can compare the effects of market volatilities on American Homes and Intuitive Investments 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 Intuitive Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Intuitive Investments.
Diversification Opportunities for American Homes and Intuitive Investments
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Intuitive is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Intuitive Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Investments 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 Intuitive Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Investments has no effect on the direction of American Homes i.e., American Homes and Intuitive Investments go up and down completely randomly.
Pair Corralation between American Homes and Intuitive Investments
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.63 times more return on investment than Intuitive Investments. However, American Homes 4 is 1.59 times less risky than Intuitive Investments. It trades about 0.04 of its potential returns per unit of risk. Intuitive Investments Group is currently generating about 0.0 per unit of risk. If you would invest 3,562 in American Homes 4 on August 26, 2024 and sell it today you would earn a total of 198.00 from holding American Homes 4 or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.9% |
| Values | Daily Returns |
American Homes 4 vs. Intuitive Investments Group
Performance |
| Timeline |
| American Homes 4 |
| Intuitive Investments |
American Homes and Intuitive Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Intuitive Investments
The main advantage of trading using opposite American Homes and Intuitive Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Intuitive Investments 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 Intuitive Investments will offset losses from the drop in Intuitive Investments' long position.| American Homes vs. Flutter Entertainment PLC | American Homes vs. Intermediate Capital Group | American Homes vs. MediaZest plc | American Homes vs. Greenroc Mining PLC |
| Intuitive Investments vs. Gamma Communications PLC | Intuitive Investments vs. American Homes 4 | Intuitive Investments vs. Waste Management | Intuitive Investments vs. Bloomsbury Publishing 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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