Correlation Between INVITATION HOMES and State Bank
Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES and State Bank 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 State Bank 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 State Bank of, you can compare the effects of market volatilities on INVITATION HOMES and State Bank 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 State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and State Bank.
Diversification Opportunities for INVITATION HOMES and State Bank
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INVITATION and State is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of INVITATION HOMES i.e., INVITATION HOMES and State Bank go up and down completely randomly.
Pair Corralation between INVITATION HOMES and State Bank
Assuming the 90 days horizon INVITATION HOMES DL is expected to generate 0.7 times more return on investment than State Bank. However, INVITATION HOMES DL is 1.42 times less risky than State Bank. It trades about 0.17 of its potential returns per unit of risk. State Bank of is currently generating about 0.01 per unit of risk. If you would invest 2,833 in INVITATION HOMES DL on October 1, 2024 and sell it today you would earn a total of 247.00 from holding INVITATION HOMES DL or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INVITATION HOMES DL vs. State Bank of
Performance |
| Timeline |
| INVITATION HOMES |
| State Bank |
INVITATION HOMES and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INVITATION HOMES and State Bank
The main advantage of trading using opposite INVITATION HOMES and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INVITATION HOMES position performs unexpectedly, State Bank 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 State Bank will offset losses from the drop in State Bank's long position.| INVITATION HOMES vs. AvalonBay Communities | INVITATION HOMES vs. Sun Communities | INVITATION HOMES vs. Essex Property Trust | INVITATION HOMES vs. American Homes 4 |
| State Bank vs. Amkor Technology | State Bank vs. PACIFIC ONLINE | State Bank vs. Microchip Technology Incorporated | State Bank vs. Gruppo Mutuionline SpA |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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