Correlation Between American Homes and Beyond Meat
Can any of the company-specific risk be diversified away by investing in both American Homes and Beyond Meat 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 American Homes and Beyond Meat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and Beyond Meat, you can compare the effects of market volatilities on American Homes and Beyond Meat 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 American Homes with a short position of Beyond Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Beyond Meat.
Diversification Opportunities for American Homes and Beyond Meat
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Beyond is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat and American 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 American Homes 4 are associated (or correlated) with Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of American Homes i.e., American Homes and Beyond Meat go up and down completely randomly.
Pair Corralation between American Homes and Beyond Meat
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.32 times more return on investment than Beyond Meat. However, American Homes 4 is 3.1 times less risky than Beyond Meat. It trades about 0.03 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.01 per unit of risk. If you would invest 3,223 in American Homes 4 on August 29, 2024 and sell it today you would earn a total of 377.00 from holding American Homes 4 or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. Beyond Meat
Performance |
| Timeline |
| American Homes 4 |
| Beyond Meat |
American Homes and Beyond Meat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Beyond Meat
The main advantage of trading using opposite American Homes and Beyond Meat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Beyond Meat 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 Beyond Meat will offset losses from the drop in Beyond Meat's long position.| American Homes vs. Superior Plus Corp | American Homes vs. NMI Holdings | American Homes vs. Origin Agritech | American Homes vs. SIVERS SEMICONDUCTORS AB |
| Beyond Meat vs. Apple Inc | Beyond Meat vs. Apple Inc | Beyond Meat vs. Apple Inc | Beyond Meat vs. Apple Inc |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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