Correlation Between INVITATION HOMES and Huaneng Power
Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES and Huaneng Power 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 Huaneng Power 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 Huaneng Power International, you can compare the effects of market volatilities on INVITATION HOMES and Huaneng Power 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 Huaneng Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and Huaneng Power.
Diversification Opportunities for INVITATION HOMES and Huaneng Power
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between INVITATION and Huaneng is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and Huaneng Power International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaneng Power Intern 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 Huaneng Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaneng Power Intern has no effect on the direction of INVITATION HOMES i.e., INVITATION HOMES and Huaneng Power go up and down completely randomly.
Pair Corralation between INVITATION HOMES and Huaneng Power
Assuming the 90 days horizon INVITATION HOMES DL is expected to generate 0.75 times more return on investment than Huaneng Power. However, INVITATION HOMES DL is 1.34 times less risky than Huaneng Power. It trades about -0.15 of its potential returns per unit of risk. Huaneng Power International is currently generating about -0.24 per unit of risk. If you would invest 3,110 in INVITATION HOMES DL on October 17, 2024 and sell it today you would lose (90.00) from holding INVITATION HOMES DL or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INVITATION HOMES DL vs. Huaneng Power International
Performance |
| Timeline |
| INVITATION HOMES |
| Huaneng Power Intern |
INVITATION HOMES and Huaneng Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INVITATION HOMES and Huaneng Power
The main advantage of trading using opposite INVITATION HOMES and Huaneng Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INVITATION HOMES position performs unexpectedly, Huaneng Power 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 Huaneng Power will offset losses from the drop in Huaneng Power's long position.| INVITATION HOMES vs. ADRIATIC METALS LS 013355 | INVITATION HOMES vs. GREENX METALS LTD | INVITATION HOMES vs. De Grey Mining | INVITATION HOMES vs. FIREWEED METALS P |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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