Correlation Between American Homes and DICKER DATA
Can any of the company-specific risk be diversified away by investing in both American Homes and DICKER DATA 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 DICKER DATA 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 DICKER DATA LTD, you can compare the effects of market volatilities on American Homes and DICKER DATA 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 DICKER DATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and DICKER DATA.
Diversification Opportunities for American Homes and DICKER DATA
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and DICKER is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and DICKER DATA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKER DATA LTD 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 DICKER DATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKER DATA LTD has no effect on the direction of American Homes i.e., American Homes and DICKER DATA go up and down completely randomly.
Pair Corralation between American Homes and DICKER DATA
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.78 times more return on investment than DICKER DATA. However, American Homes 4 is 1.27 times less risky than DICKER DATA. It trades about 0.29 of its potential returns per unit of risk. DICKER DATA LTD is currently generating about 0.05 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. DICKER DATA LTD
Performance |
| Timeline |
| American Homes 4 |
| DICKER DATA LTD |
American Homes and DICKER DATA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and DICKER DATA
The main advantage of trading using opposite American Homes and DICKER DATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, DICKER DATA 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 DICKER DATA will offset losses from the drop in DICKER DATA's long position.| American Homes vs. UDR Inc | American Homes vs. INVITATION HOMES DL | American Homes vs. Superior Plus Corp | American Homes vs. Origin Agritech |
| DICKER DATA vs. Japan Post Insurance | DICKER DATA vs. HANOVER INSURANCE | DICKER DATA vs. QBE Insurance Group | DICKER DATA vs. Selective Insurance Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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