Correlation Between American Homes and Townsquare Media
Can any of the company-specific risk be diversified away by investing in both American Homes and Townsquare Media 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 Townsquare Media 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 Townsquare Media, you can compare the effects of market volatilities on American Homes and Townsquare Media 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 Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Townsquare Media.
Diversification Opportunities for American Homes and Townsquare Media
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Townsquare is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media 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 Townsquare Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Townsquare Media has no effect on the direction of American Homes i.e., American Homes and Townsquare Media go up and down completely randomly.
Pair Corralation between American Homes and Townsquare Media
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.86 times more return on investment than Townsquare Media. However, American Homes 4 is 1.17 times less risky than Townsquare Media. It trades about 0.05 of its potential returns per unit of risk. Townsquare Media is currently generating about -0.04 per unit of risk. If you would invest 3,191 in American Homes 4 on September 3, 2024 and sell it today you would earn a total of 429.00 from holding American Homes 4 or generate 13.44% 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. Townsquare Media
Performance |
| Timeline |
| American Homes 4 |
| Townsquare Media |
American Homes and Townsquare Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Townsquare Media
The main advantage of trading using opposite American Homes and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Townsquare Media 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 Townsquare Media will offset losses from the drop in Townsquare Media's long position.| American Homes vs. AvalonBay Communities | American Homes vs. UDR Inc | American Homes vs. INVITATION HOMES DL | American Homes vs. Essex Property Trust |
| Townsquare Media vs. Lyxor 1 | Townsquare Media vs. Xtrackers ShortDAX | Townsquare Media vs. Xtrackers LevDAX |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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