Correlation Between Charter Communications and American Homes
Can any of the company-specific risk be diversified away by investing in both Charter Communications and American Homes 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 Charter Communications and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications Cl and American Homes 4, you can compare the effects of market volatilities on Charter Communications and American Homes 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 Charter Communications with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and American Homes.
Diversification Opportunities for Charter Communications and American Homes
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Charter and American is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Charter Communications 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 Charter Communications Cl are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Charter Communications i.e., Charter Communications and American Homes go up and down completely randomly.
Pair Corralation between Charter Communications and American Homes
Assuming the 90 days trading horizon Charter Communications is expected to generate 2.02 times less return on investment than American Homes. In addition to that, Charter Communications is 1.66 times more volatile than American Homes 4. It trades about 0.01 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.05 per unit of volatility. If you would invest 2,824 in American Homes 4 on December 11, 2024 and sell it today you would earn a total of 809.00 from holding American Homes 4 or generate 28.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.29% |
| Values | Daily Returns |
Charter Communications Cl vs. American Homes 4
Performance |
| Timeline |
| Charter Communications |
| American Homes 4 |
Charter Communications and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and American Homes
The main advantage of trading using opposite Charter Communications and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Charter Communications vs. Hochschild Mining plc | ||
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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