Correlation Between American Homes and Dave Busters
Can any of the company-specific risk be diversified away by investing in both American Homes and Dave Busters 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 Dave Busters 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 Dave Busters Entertainment, you can compare the effects of market volatilities on American Homes and Dave Busters 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 Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Dave Busters.
Diversification Opportunities for American Homes and Dave Busters
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Dave is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta 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 Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of American Homes i.e., American Homes and Dave Busters go up and down completely randomly.
Pair Corralation between American Homes and Dave Busters
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.58 times more return on investment than Dave Busters. However, American Homes 4 is 1.72 times less risky than Dave Busters. It trades about 0.03 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about 0.02 per unit of risk. If you would invest 2,890 in American Homes 4 on September 1, 2024 and sell it today you would earn a total of 730.00 from holding American Homes 4 or generate 25.26% 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. Dave Busters Entertainment
Performance |
| Timeline |
| American Homes 4 |
| Dave Busters Enterta |
American Homes and Dave Busters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Dave Busters
The main advantage of trading using opposite American Homes and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Dave Busters 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 Dave Busters will offset losses from the drop in Dave Busters' long position.| American Homes vs. UDR Inc | American Homes vs. Superior Plus Corp | American Homes vs. Origin Agritech | American Homes vs. Identiv |
| Dave Busters vs. CVS Health | Dave Busters vs. Bumrungrad Hospital Public | Dave Busters vs. Gamma Communications plc | Dave Busters vs. United Rentals |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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