Correlation Between American Homes and ACCOR SPADR
Can any of the company-specific risk be diversified away by investing in both American Homes and ACCOR SPADR 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 ACCOR SPADR 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 ACCOR SPADR NEW, you can compare the effects of market volatilities on American Homes and ACCOR SPADR 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 ACCOR SPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and ACCOR SPADR.
Diversification Opportunities for American Homes and ACCOR SPADR
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and ACCOR is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and ACCOR SPADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCOR SPADR NEW 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 ACCOR SPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACCOR SPADR NEW has no effect on the direction of American Homes i.e., American Homes and ACCOR SPADR go up and down completely randomly.
Pair Corralation between American Homes and ACCOR SPADR
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.92 times more return on investment than ACCOR SPADR. However, American Homes 4 is 1.09 times less risky than ACCOR SPADR. It trades about 0.01 of its potential returns per unit of risk. ACCOR SPADR NEW is currently generating about -0.1 per unit of risk. If you would invest 3,360 in American Homes 4 on November 29, 2024 and sell it today you would earn a total of 0.00 from holding American Homes 4 or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. ACCOR SPADR NEW
Performance |
| Timeline |
| American Homes 4 |
| ACCOR SPADR NEW |
American Homes and ACCOR SPADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and ACCOR SPADR
The main advantage of trading using opposite American Homes and ACCOR SPADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, ACCOR SPADR 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 ACCOR SPADR will offset losses from the drop in ACCOR SPADR's long position.| American Homes vs. EAGLE MATERIALS | American Homes vs. Hyster Yale Materials Handling | American Homes vs. ALBIS LEASING AG | American Homes vs. Plastic Omnium |
| ACCOR SPADR vs. CORNISH METALS INC | ACCOR SPADR vs. Chalice Mining Limited | ACCOR SPADR vs. East Africa Metals | ACCOR SPADR vs. Hellenic Telecommunications Organization |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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