Correlation Between American Homes and REDSUN PROPERTIES
Can any of the company-specific risk be diversified away by investing in both American Homes and REDSUN PROPERTIES 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 REDSUN PROPERTIES 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 REDSUN PROPERTIES GROUP, you can compare the effects of market volatilities on American Homes and REDSUN PROPERTIES 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 REDSUN PROPERTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and REDSUN PROPERTIES.
Diversification Opportunities for American Homes and REDSUN PROPERTIES
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and REDSUN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and REDSUN PROPERTIES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDSUN PROPERTIES 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 REDSUN PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDSUN PROPERTIES has no effect on the direction of American Homes i.e., American Homes and REDSUN PROPERTIES go up and down completely randomly.
Pair Corralation between American Homes and REDSUN PROPERTIES
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.1 times more return on investment than REDSUN PROPERTIES. However, American Homes 4 is 10.4 times less risky than REDSUN PROPERTIES. It trades about 0.02 of its potential returns per unit of risk. REDSUN PROPERTIES GROUP is currently generating about -0.01 per unit of risk. If you would invest 3,580 in American Homes 4 on September 14, 2024 and sell it today you would earn a total of 20.00 from holding American Homes 4 or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. REDSUN PROPERTIES GROUP
Performance |
| Timeline |
| American Homes 4 |
| REDSUN PROPERTIES |
American Homes and REDSUN PROPERTIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and REDSUN PROPERTIES
The main advantage of trading using opposite American Homes and REDSUN PROPERTIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, REDSUN PROPERTIES 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 REDSUN PROPERTIES will offset losses from the drop in REDSUN PROPERTIES's long position.| American Homes vs. INVITATION HOMES DL | American Homes vs. Superior Plus Corp | American Homes vs. SIVERS SEMICONDUCTORS AB | American Homes vs. NorAm Drilling AS |
| REDSUN PROPERTIES vs. HomeToGo SE | REDSUN PROPERTIES vs. Infrastrutture Wireless Italiane | REDSUN PROPERTIES vs. Haier Smart Home | REDSUN PROPERTIES vs. American Homes 4 |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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