Correlation Between American Homes and ANGI Homeservices
Can any of the company-specific risk be diversified away by investing in both American Homes and ANGI Homeservices 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 ANGI Homeservices 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 ANGI Homeservices, you can compare the effects of market volatilities on American Homes and ANGI Homeservices 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 ANGI Homeservices. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and ANGI Homeservices.
Diversification Opportunities for American Homes and ANGI Homeservices
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and ANGI is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and ANGI Homeservices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGI Homeservices 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 ANGI Homeservices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGI Homeservices has no effect on the direction of American Homes i.e., American Homes and ANGI Homeservices go up and down completely randomly.
Pair Corralation between American Homes and ANGI Homeservices
Assuming the 90 days trading horizon American Homes is expected to generate 1.16 times less return on investment than ANGI Homeservices. But when comparing it to its historical volatility, American Homes 4 is 2.55 times less risky than ANGI Homeservices. It trades about 0.03 of its potential returns per unit of risk. ANGI Homeservices is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 199.00 in ANGI Homeservices on September 1, 2024 and sell it today you would lose (24.00) from holding ANGI Homeservices or give up 12.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Homes 4 vs. ANGI Homeservices
Performance |
| Timeline |
| American Homes 4 |
| ANGI Homeservices |
American Homes and ANGI Homeservices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and ANGI Homeservices
The main advantage of trading using opposite American Homes and ANGI Homeservices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, ANGI Homeservices 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 ANGI Homeservices will offset losses from the drop in ANGI Homeservices' long position.| American Homes vs. UDR Inc | American Homes vs. Superior Plus Corp | American Homes vs. Origin Agritech | American Homes vs. Identiv |
| ANGI Homeservices vs. HEALTHCARE REAL A | ANGI Homeservices vs. United Insurance Holdings | ANGI Homeservices vs. Reinsurance Group of | ANGI Homeservices vs. Japan Post Insurance |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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