Correlation Between Cairo Communication and American Homes
Can any of the company-specific risk be diversified away by investing in both Cairo Communication 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 Cairo Communication and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo Communication SpA and American Homes 4, you can compare the effects of market volatilities on Cairo Communication 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 Cairo Communication with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and American Homes.
Diversification Opportunities for Cairo Communication and American Homes
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cairo and American is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA 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 Cairo Communication 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 Cairo Communication SpA 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 Cairo Communication i.e., Cairo Communication and American Homes go up and down completely randomly.
Pair Corralation between Cairo Communication and American Homes
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 1.21 times more return on investment than American Homes. However, Cairo Communication is 1.21 times more volatile than American Homes 4. It trades about -0.13 of its potential returns per unit of risk. American Homes 4 is currently generating about -0.16 per unit of risk. If you would invest 253.00 in Cairo Communication SpA on October 14, 2024 and sell it today you would lose (9.00) from holding Cairo Communication SpA or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Cairo Communication SpA vs. American Homes 4
Performance |
| Timeline |
| Cairo Communication SpA |
| American Homes 4 |
Cairo Communication and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and American Homes
The main advantage of trading using opposite Cairo Communication and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication 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.| Cairo Communication vs. Cornish Metals | Cairo Communication vs. Hochschild Mining plc | Cairo Communication vs. Jacquet Metal Service | Cairo Communication vs. Wheaton Precious Metals |
| American Homes vs. Gamma Communications PLC | American Homes vs. Cairo Communication SpA | American Homes vs. Jacquet Metal Service | American Homes vs. Coeur Mining |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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