Correlation Between AvalonBay Communities and Apartment Investment
Can any of the company-specific risk be diversified away by investing in both AvalonBay Communities and Apartment Investment 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 AvalonBay Communities and Apartment Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AvalonBay Communities and Apartment Investment and, you can compare the effects of market volatilities on AvalonBay Communities and Apartment Investment 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 AvalonBay Communities with a short position of Apartment Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AvalonBay Communities and Apartment Investment.
Diversification Opportunities for AvalonBay Communities and Apartment Investment
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AvalonBay and Apartment is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding AvalonBay Communities and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and and AvalonBay Communities 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 AvalonBay Communities are associated (or correlated) with Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of AvalonBay Communities i.e., AvalonBay Communities and Apartment Investment go up and down completely randomly.
Pair Corralation between AvalonBay Communities and Apartment Investment
Considering the 90-day investment horizon AvalonBay Communities is expected to generate 1.03 times more return on investment than Apartment Investment. However, AvalonBay Communities is 1.03 times more volatile than Apartment Investment and. It trades about 0.06 of its potential returns per unit of risk. Apartment Investment and is currently generating about -0.03 per unit of risk. If you would invest 22,543 in AvalonBay Communities on September 2, 2024 and sell it today you would earn a total of 992.00 from holding AvalonBay Communities or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AvalonBay Communities vs. Apartment Investment and
Performance |
| Timeline |
| AvalonBay Communities |
| Apartment Investment and |
AvalonBay Communities and Apartment Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AvalonBay Communities and Apartment Investment
The main advantage of trading using opposite AvalonBay Communities and Apartment Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AvalonBay Communities position performs unexpectedly, Apartment Investment 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 Apartment Investment will offset losses from the drop in Apartment Investment's long position.| AvalonBay Communities vs. Nexpoint Residential Trust | AvalonBay Communities vs. Veris Residential | AvalonBay Communities vs. Clipper Realty | AvalonBay Communities vs. UDR Inc |
| Apartment Investment vs. Clipper Realty | Apartment Investment vs. Independence Realty Trust | Apartment Investment vs. BRT Realty Trust | Apartment Investment vs. UDR Inc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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