Correlation Between Schweiter Technologies and American Homes
Can any of the company-specific risk be diversified away by investing in both Schweiter Technologies 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 Schweiter Technologies and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schweiter Technologies AG and American Homes 4, you can compare the effects of market volatilities on Schweiter Technologies 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 Schweiter Technologies with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweiter Technologies and American Homes.
Diversification Opportunities for Schweiter Technologies and American Homes
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Schweiter and American is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Schweiter Technologies AG 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 Schweiter Technologies 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 Schweiter Technologies AG 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 Schweiter Technologies i.e., Schweiter Technologies and American Homes go up and down completely randomly.
Pair Corralation between Schweiter Technologies and American Homes
Assuming the 90 days trading horizon Schweiter Technologies is expected to generate 2.99 times less return on investment than American Homes. In addition to that, Schweiter Technologies is 2.48 times more volatile than American Homes 4. It trades about 0.03 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.21 per unit of volatility. If you would invest 3,674 in American Homes 4 on August 31, 2024 and sell it today you would earn a total of 203.00 from holding American Homes 4 or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schweiter Technologies AG vs. American Homes 4
Performance |
| Timeline |
| Schweiter Technologies |
| American Homes 4 |
Schweiter Technologies and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schweiter Technologies and American Homes
The main advantage of trading using opposite Schweiter Technologies and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweiter Technologies 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.| Schweiter Technologies vs. Neometals | Schweiter Technologies vs. Coor Service Management | Schweiter Technologies vs. Aeorema Communications Plc | Schweiter Technologies vs. JLEN Environmental Assets |
| American Homes vs. Neometals | American Homes vs. Coor Service Management | American Homes vs. Aeorema Communications Plc | American Homes vs. JLEN Environmental Assets |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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