Correlation Between American Homes and FUYO GENERAL
Can any of the company-specific risk be diversified away by investing in both American Homes and FUYO GENERAL 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 FUYO GENERAL 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 FUYO GENERAL LEASE, you can compare the effects of market volatilities on American Homes and FUYO GENERAL 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 FUYO GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and FUYO GENERAL.
Diversification Opportunities for American Homes and FUYO GENERAL
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and FUYO is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE 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 FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of American Homes i.e., American Homes and FUYO GENERAL go up and down completely randomly.
Pair Corralation between American Homes and FUYO GENERAL
Assuming the 90 days trading horizon American Homes 4 is expected to generate 1.18 times more return on investment than FUYO GENERAL. However, American Homes is 1.18 times more volatile than FUYO GENERAL LEASE. It trades about 0.02 of its potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about 0.02 per unit of risk. If you would invest 3,371 in American Homes 4 on September 21, 2024 and sell it today you would earn a total of 89.00 from holding American Homes 4 or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. FUYO GENERAL LEASE
Performance |
| Timeline |
| American Homes 4 |
| FUYO GENERAL LEASE |
American Homes and FUYO GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and FUYO GENERAL
The main advantage of trading using opposite American Homes and FUYO GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, FUYO GENERAL 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 FUYO GENERAL will offset losses from the drop in FUYO GENERAL's long position.| American Homes vs. INVITATION HOMES DL | American Homes vs. Superior Plus Corp | American Homes vs. SIVERS SEMICONDUCTORS AB | American Homes vs. NorAm Drilling AS |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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