Correlation Between American Homes and Tradegate
Can any of the company-specific risk be diversified away by investing in both American Homes and Tradegate 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 Tradegate 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 Tradegate AG Wertpapierhandelsbank, you can compare the effects of market volatilities on American Homes and Tradegate 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 Tradegate. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Tradegate.
Diversification Opportunities for American Homes and Tradegate
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Tradegate is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Tradegate AG Wertpapierhandels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradegate AG Wertpap 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 Tradegate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradegate AG Wertpap has no effect on the direction of American Homes i.e., American Homes and Tradegate go up and down completely randomly.
Pair Corralation between American Homes and Tradegate
Assuming the 90 days trading horizon American Homes 4 is expected to under-perform the Tradegate. In addition to that, American Homes is 3.65 times more volatile than Tradegate AG Wertpapierhandelsbank. It trades about -0.08 of its total potential returns per unit of risk. Tradegate AG Wertpapierhandelsbank is currently generating about 0.08 per unit of volatility. If you would invest 8,700 in Tradegate AG Wertpapierhandelsbank on October 11, 2024 and sell it today you would earn a total of 50.00 from holding Tradegate AG Wertpapierhandelsbank or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
American Homes 4 vs. Tradegate AG Wertpapierhandels
Performance |
| Timeline |
| American Homes 4 |
| Tradegate AG Wertpap |
American Homes and Tradegate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Tradegate
The main advantage of trading using opposite American Homes and Tradegate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Tradegate 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 Tradegate will offset losses from the drop in Tradegate's long position.| American Homes vs. The Hongkong and | American Homes vs. GRENKELEASING Dusseldorf | American Homes vs. Sunstone Hotel Investors | American Homes vs. Tencent Music Entertainment |
| Tradegate vs. 24SEVENOFFICE GROUP AB | Tradegate vs. Forsys Metals Corp | Tradegate vs. CAIRN HOMES EO | Tradegate vs. American Homes 4 |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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