Correlation Between American Homes and ProSiebenSat1 Media
Can any of the company-specific risk be diversified away by investing in both American Homes and ProSiebenSat1 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 ProSiebenSat1 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 ProSiebenSat1 Media SE, you can compare the effects of market volatilities on American Homes and ProSiebenSat1 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 ProSiebenSat1 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and ProSiebenSat1 Media.
Diversification Opportunities for American Homes and ProSiebenSat1 Media
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and ProSiebenSat1 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and ProSiebenSat1 Media SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProSiebenSat1 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 ProSiebenSat1 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProSiebenSat1 Media has no effect on the direction of American Homes i.e., American Homes and ProSiebenSat1 Media go up and down completely randomly.
Pair Corralation between American Homes and ProSiebenSat1 Media
Assuming the 90 days trading horizon American Homes is expected to generate 3.68 times less return on investment than ProSiebenSat1 Media. But when comparing it to its historical volatility, American Homes 4 is 1.48 times less risky than ProSiebenSat1 Media. It trades about 0.08 of its potential returns per unit of risk. ProSiebenSat1 Media SE is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 554.00 in ProSiebenSat1 Media SE on December 8, 2024 and sell it today you would earn a total of 68.00 from holding ProSiebenSat1 Media SE or generate 12.27% 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. ProSiebenSat1 Media SE
Performance |
| Timeline |
| American Homes 4 |
| ProSiebenSat1 Media |
American Homes and ProSiebenSat1 Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and ProSiebenSat1 Media
The main advantage of trading using opposite American Homes and ProSiebenSat1 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, ProSiebenSat1 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 ProSiebenSat1 Media will offset losses from the drop in ProSiebenSat1 Media's long position.| American Homes vs. EVS Broadcast Equipment | ||
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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