Correlation Between INVITATION HOMES and Highlight Communications

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Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES and Highlight Communications 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 INVITATION HOMES and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INVITATION HOMES DL and Highlight Communications AG, you can compare the effects of market volatilities on INVITATION HOMES and Highlight Communications 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 INVITATION HOMES with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and Highlight Communications.

Diversification Opportunities for INVITATION HOMES and Highlight Communications

INVITATIONHighlightDiversified AwayINVITATIONHighlightDiversified Away100%
-0.73
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between INVITATION and Highlight is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and INVITATION 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 INVITATION HOMES DL are associated (or correlated) with Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of INVITATION HOMES i.e., INVITATION HOMES and Highlight Communications go up and down completely randomly.

Pair Corralation between INVITATION HOMES and Highlight Communications

Assuming the 90 days horizon INVITATION HOMES DL is expected to generate 0.35 times more return on investment than Highlight Communications. However, INVITATION HOMES DL is 2.85 times less risky than Highlight Communications. It trades about 0.01 of its potential returns per unit of risk. Highlight Communications AG is currently generating about -0.07 per unit of risk. If you would invest  3,030  in INVITATION HOMES DL on November 21, 2024 and sell it today you would earn a total of  10.00  from holding INVITATION HOMES DL or generate 0.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

INVITATION HOMES DL  vs.  Highlight Communications AG

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 01020304050
JavaScript chart by amCharts 3.21.154IV HLG
       Timeline  
INVITATION HOMES 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days INVITATION HOMES DL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, INVITATION HOMES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2929.53030.53131.53232.5
Highlight Communications 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Highlight Communications AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Highlight Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.11.21.31.41.51.61.7

INVITATION HOMES and Highlight Communications Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.77-1.33-0.89-0.45-0.0370.320.761.21.642.08 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.154IV HLG
       Returns  

Pair Trading with INVITATION HOMES and Highlight Communications

The main advantage of trading using opposite INVITATION HOMES and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INVITATION HOMES position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.
The idea behind INVITATION HOMES DL and Highlight Communications AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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