Correlation Between American Homes and SYLVANIA PLAT
Can any of the company-specific risk be diversified away by investing in both American Homes and SYLVANIA PLAT 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 SYLVANIA PLAT 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 SYLVANIA PLAT DL, you can compare the effects of market volatilities on American Homes and SYLVANIA PLAT 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 SYLVANIA PLAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and SYLVANIA PLAT.
Diversification Opportunities for American Homes and SYLVANIA PLAT
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and SYLVANIA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and SYLVANIA PLAT DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYLVANIA PLAT DL 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 SYLVANIA PLAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYLVANIA PLAT DL has no effect on the direction of American Homes i.e., American Homes and SYLVANIA PLAT go up and down completely randomly.
Pair Corralation between American Homes and SYLVANIA PLAT
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.41 times more return on investment than SYLVANIA PLAT. However, American Homes 4 is 2.43 times less risky than SYLVANIA PLAT. It trades about 0.04 of its potential returns per unit of risk. SYLVANIA PLAT DL is currently generating about -0.01 per unit of risk. If you would invest 2,679 in American Homes 4 on September 12, 2024 and sell it today you would earn a total of 881.00 from holding American Homes 4 or generate 32.89% 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. SYLVANIA PLAT DL
Performance |
| Timeline |
| American Homes 4 |
| SYLVANIA PLAT DL |
American Homes and SYLVANIA PLAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and SYLVANIA PLAT
The main advantage of trading using opposite American Homes and SYLVANIA PLAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, SYLVANIA PLAT 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 SYLVANIA PLAT will offset losses from the drop in SYLVANIA PLAT'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 |
| SYLVANIA PLAT vs. American Homes 4 | SYLVANIA PLAT vs. Tri Pointe Homes | SYLVANIA PLAT vs. Luckin Coffee | SYLVANIA PLAT vs. Hollywood Bowl Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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