Correlation Between INVITATION HOMES and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES and Reinsurance Group 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 Reinsurance Group 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 Reinsurance Group of, you can compare the effects of market volatilities on INVITATION HOMES and Reinsurance Group 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 Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and Reinsurance Group.
Diversification Opportunities for INVITATION HOMES and Reinsurance Group
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INVITATION and Reinsurance is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of INVITATION HOMES i.e., INVITATION HOMES and Reinsurance Group go up and down completely randomly.
Pair Corralation between INVITATION HOMES and Reinsurance Group
Assuming the 90 days horizon INVITATION HOMES is expected to generate 3.96 times less return on investment than Reinsurance Group. But when comparing it to its historical volatility, INVITATION HOMES DL is 1.24 times less risky than Reinsurance Group. It trades about 0.02 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 12,544 in Reinsurance Group of on October 14, 2024 and sell it today you would earn a total of 8,856 from holding Reinsurance Group of or generate 70.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INVITATION HOMES DL vs. Reinsurance Group of
Performance |
| Timeline |
| INVITATION HOMES |
| Reinsurance Group |
INVITATION HOMES and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INVITATION HOMES and Reinsurance Group
The main advantage of trading using opposite INVITATION HOMES and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INVITATION HOMES position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| INVITATION HOMES vs. ADRIATIC METALS LS 013355 | INVITATION HOMES vs. VIVA WINE GROUP | INVITATION HOMES vs. Jacquet Metal Service | INVITATION HOMES vs. UNITED UTILITIES GR |
| Reinsurance Group vs. CITY OFFICE REIT | Reinsurance Group vs. CAIRN HOMES EO | Reinsurance Group vs. INVITATION HOMES DL | Reinsurance Group vs. BORR DRILLING NEW |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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