Correlation Between American Homes and Scientific Games
Can any of the company-specific risk be diversified away by investing in both American Homes and Scientific Games 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 Scientific Games 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 Scientific Games, you can compare the effects of market volatilities on American Homes and Scientific Games 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 Scientific Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Scientific Games.
Diversification Opportunities for American Homes and Scientific Games
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Scientific is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games 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 Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of American Homes i.e., American Homes and Scientific Games go up and down completely randomly.
Pair Corralation between American Homes and Scientific Games
Assuming the 90 days trading horizon American Homes 4 is expected to generate 0.94 times more return on investment than Scientific Games. However, American Homes 4 is 1.07 times less risky than Scientific Games. It trades about -0.1 of its potential returns per unit of risk. Scientific Games is currently generating about -0.38 per unit of risk. If you would invest 3,535 in American Homes 4 on October 10, 2024 and sell it today you would lose (95.00) from holding American Homes 4 or give up 2.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. Scientific Games
Performance |
| Timeline |
| American Homes 4 |
| Scientific Games |
American Homes and Scientific Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and Scientific Games
The main advantage of trading using opposite American Homes and Scientific Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Scientific Games 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 Scientific Games will offset losses from the drop in Scientific Games' long position.| American Homes vs. INVITATION HOMES DL | American Homes vs. Superior Plus Corp | American Homes vs. NMI Holdings | American Homes vs. SIVERS SEMICONDUCTORS AB |
| Scientific Games vs. ELMOS SEMICONDUCTOR | Scientific Games vs. BE Semiconductor Industries | Scientific Games vs. Solstad Offshore ASA | Scientific Games vs. NXP Semiconductors NV |
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 Stocks Directory module to find actively traded stocks across global markets.
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