Correlation Between American Homes and SCIENCE IN
Can any of the company-specific risk be diversified away by investing in both American Homes and SCIENCE IN 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 SCIENCE IN 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 SCIENCE IN SPORT, you can compare the effects of market volatilities on American Homes and SCIENCE IN 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 SCIENCE IN. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and SCIENCE IN.
Diversification Opportunities for American Homes and SCIENCE IN
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and SCIENCE is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and SCIENCE IN SPORT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCIENCE IN SPORT 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 SCIENCE IN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCIENCE IN SPORT has no effect on the direction of American Homes i.e., American Homes and SCIENCE IN go up and down completely randomly.
Pair Corralation between American Homes and SCIENCE IN
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.86 times more return on investment than SCIENCE IN. However, American Homes 4 is 1.16 times less risky than SCIENCE IN. It trades about 0.29 of its potential returns per unit of risk. SCIENCE IN SPORT is currently generating about 0.08 per unit of risk. If you would invest 3,220 in American Homes 4 on September 1, 2024 and sell it today you would earn a total of 400.00 from holding American Homes 4 or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. SCIENCE IN SPORT
Performance |
| Timeline |
| American Homes 4 |
| SCIENCE IN SPORT |
American Homes and SCIENCE IN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and SCIENCE IN
The main advantage of trading using opposite American Homes and SCIENCE IN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, SCIENCE IN 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 SCIENCE IN will offset losses from the drop in SCIENCE IN's long position.| American Homes vs. UDR Inc | American Homes vs. Superior Plus Corp | American Homes vs. Origin Agritech | American Homes vs. Identiv |
| SCIENCE IN vs. Danone SA | SCIENCE IN vs. Superior Plus Corp | SCIENCE IN vs. NMI Holdings | SCIENCE IN vs. Origin Agritech |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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