Correlation Between American Homes and PVH Corp
Can any of the company-specific risk be diversified away by investing in both American Homes and PVH Corp 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 PVH Corp 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 PVH Corp, you can compare the effects of market volatilities on American Homes and PVH Corp 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 PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and PVH Corp.
Diversification Opportunities for American Homes and PVH Corp
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and PVH is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of American Homes i.e., American Homes and PVH Corp go up and down completely randomly.
Pair Corralation between American Homes and PVH Corp
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.7 times more return on investment than PVH Corp. However, American Homes 4 is 1.43 times less risky than PVH Corp. It trades about -0.15 of its potential returns per unit of risk. PVH Corp is currently generating about -0.43 per unit of risk. If you would invest 3,460 in American Homes 4 on October 30, 2024 and sell it today you would lose (160.00) from holding American Homes 4 or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. PVH Corp
Performance |
| Timeline |
| American Homes 4 |
| PVH Corp |
American Homes and PVH Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and PVH Corp
The main advantage of trading using opposite American Homes and PVH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, PVH Corp 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 PVH Corp will offset losses from the drop in PVH Corp's long position.| American Homes vs. Osisko Metals | American Homes vs. AEON METALS LTD | American Homes vs. PARKEN Sport Entertainment | American Homes vs. alstria office REIT AG |
| PVH Corp vs. AOYAMA TRADING | PVH Corp vs. Apollo Investment Corp | PVH Corp vs. Comba Telecom Systems | PVH Corp vs. HUTCHISON TELECOMM |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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