Correlation Between American Assets and Invitation Homes
Can any of the company-specific risk be diversified away by investing in both American Assets and Invitation Homes 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 Assets and Invitation Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Assets Trust and Invitation Homes, you can compare the effects of market volatilities on American Assets and Invitation Homes 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 Assets with a short position of Invitation Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Assets and Invitation Homes.
Diversification Opportunities for American Assets and Invitation Homes
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Invitation is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding American Assets Trust and Invitation Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invitation Homes and American Assets 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 Assets Trust are associated (or correlated) with Invitation Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invitation Homes has no effect on the direction of American Assets i.e., American Assets and Invitation Homes go up and down completely randomly.
Pair Corralation between American Assets and Invitation Homes
Considering the 90-day investment horizon American Assets Trust is expected to generate 1.35 times more return on investment than Invitation Homes. However, American Assets is 1.35 times more volatile than Invitation Homes. It trades about 0.03 of its potential returns per unit of risk. Invitation Homes is currently generating about 0.03 per unit of risk. If you would invest 2,415 in American Assets Trust on August 27, 2024 and sell it today you would earn a total of 393.00 from holding American Assets Trust or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Assets Trust vs. Invitation Homes
Performance |
| Timeline |
| American Assets Trust |
| Invitation Homes |
American Assets and Invitation Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Assets and Invitation Homes
The main advantage of trading using opposite American Assets and Invitation Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Assets position performs unexpectedly, Invitation Homes 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 Invitation Homes will offset losses from the drop in Invitation Homes' long position.| American Assets vs. Essential Properties Realty | American Assets vs. Armada Hflr Pr | American Assets vs. CTO Realty Growth | American Assets vs. Brightspire Capital |
| Invitation Homes vs. American Homes 4 | Invitation Homes vs. Mid America Apartment Communities | Invitation Homes vs. Camden Property Trust | Invitation Homes vs. Sun Communities |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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