Correlation Between Superior Plus and American Homes
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and American Homes 4, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and American Homes.
Diversification Opportunities for Superior Plus and American Homes
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Superior and American is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp 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 Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and American Homes go up and down completely randomly.
Pair Corralation between Superior Plus and American Homes
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the American Homes. In addition to that, Superior Plus is 1.25 times more volatile than American Homes 4. It trades about -0.02 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.04 per unit of volatility. If you would invest 2,852 in American Homes 4 on August 28, 2024 and sell it today you would earn a total of 748.00 from holding American Homes 4 or generate 26.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. American Homes 4
Performance |
| Timeline |
| Superior Plus Corp |
| American Homes 4 |
Superior Plus and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and American Homes
The main advantage of trading using opposite Superior Plus and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. CDL INVESTMENT | Superior Plus vs. ECHO INVESTMENT ZY | Superior Plus vs. SEI INVESTMENTS | Superior Plus vs. Gruppo Mutuionline SpA |
| American Homes vs. Superior Plus Corp | American Homes vs. NMI Holdings | American Homes vs. Origin Agritech | American Homes vs. SIVERS SEMICONDUCTORS AB |
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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