Correlation Between American Homes and CENTURIA OFFICE
Can any of the company-specific risk be diversified away by investing in both American Homes and CENTURIA OFFICE 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 CENTURIA OFFICE 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 CENTURIA OFFICE REIT, you can compare the effects of market volatilities on American Homes and CENTURIA OFFICE 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 CENTURIA OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and CENTURIA OFFICE.
Diversification Opportunities for American Homes and CENTURIA OFFICE
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and CENTURIA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and CENTURIA OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTURIA OFFICE REIT 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 CENTURIA OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTURIA OFFICE REIT has no effect on the direction of American Homes i.e., American Homes and CENTURIA OFFICE go up and down completely randomly.
Pair Corralation between American Homes and CENTURIA OFFICE
Assuming the 90 days trading horizon American Homes 4 is expected to generate 1.87 times more return on investment than CENTURIA OFFICE. However, American Homes is 1.87 times more volatile than CENTURIA OFFICE REIT. It trades about 0.11 of its potential returns per unit of risk. CENTURIA OFFICE REIT is currently generating about 0.11 per unit of risk. If you would invest 3,480 in American Homes 4 on August 30, 2024 and sell it today you would earn a total of 180.00 from holding American Homes 4 or generate 5.17% 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. CENTURIA OFFICE REIT
Performance |
| Timeline |
| American Homes 4 |
| CENTURIA OFFICE REIT |
American Homes and CENTURIA OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and CENTURIA OFFICE
The main advantage of trading using opposite American Homes and CENTURIA OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, CENTURIA OFFICE 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 CENTURIA OFFICE will offset losses from the drop in CENTURIA OFFICE's long position.| American Homes vs. Cogent Communications Holdings | American Homes vs. Tencent Music Entertainment | American Homes vs. Ultra Clean Holdings | American Homes vs. UNIVMUSIC GRPADR050 |
| CENTURIA OFFICE vs. Media and Games | CENTURIA OFFICE vs. ADRIATIC METALS LS 013355 | CENTURIA OFFICE vs. Scientific Games | CENTURIA OFFICE vs. GameStop Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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