Correlation Between American Homes and CNVISION MEDIA
Can any of the company-specific risk be diversified away by investing in both American Homes and CNVISION MEDIA 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 CNVISION MEDIA 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 CNVISION MEDIA, you can compare the effects of market volatilities on American Homes and CNVISION MEDIA 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 CNVISION MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and CNVISION MEDIA.
Diversification Opportunities for American Homes and CNVISION MEDIA
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and CNVISION is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and CNVISION MEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNVISION MEDIA 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 CNVISION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNVISION MEDIA has no effect on the direction of American Homes i.e., American Homes and CNVISION MEDIA go up and down completely randomly.
Pair Corralation between American Homes and CNVISION MEDIA
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.53 times more return on investment than CNVISION MEDIA. However, American Homes 4 is 1.88 times less risky than CNVISION MEDIA. It trades about 0.04 of its potential returns per unit of risk. CNVISION MEDIA is currently generating about -0.01 per unit of risk. If you would invest 2,852 in American Homes 4 on September 3, 2024 and sell it today you would earn a total of 768.00 from holding American Homes 4 or generate 26.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. CNVISION MEDIA
Performance |
| Timeline |
| American Homes 4 |
| CNVISION MEDIA |
American Homes and CNVISION MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and CNVISION MEDIA
The main advantage of trading using opposite American Homes and CNVISION MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, CNVISION MEDIA 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 CNVISION MEDIA will offset losses from the drop in CNVISION MEDIA's long position.| American Homes vs. AvalonBay Communities | American Homes vs. UDR Inc | American Homes vs. INVITATION HOMES DL |
| CNVISION MEDIA vs. GRUPO CARSO A1 | CNVISION MEDIA vs. Commercial Vehicle Group | CNVISION MEDIA vs. PennantPark Investment | CNVISION MEDIA vs. Tower One Wireless |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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