Correlation Between AEON STORES and American Homes
Can any of the company-specific risk be diversified away by investing in both AEON STORES and American 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 AEON STORES and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEON STORES and American Homes 4, you can compare the effects of market volatilities on AEON STORES and American 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 AEON STORES with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON STORES and American Homes.
Diversification Opportunities for AEON STORES and American Homes
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AEON and American is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and AEON STORES 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 AEON STORES are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of AEON STORES i.e., AEON STORES and American Homes go up and down completely randomly.
Pair Corralation between AEON STORES and American Homes
Assuming the 90 days trading horizon AEON STORES is expected to under-perform the American Homes. In addition to that, AEON STORES is 1.9 times more volatile than American Homes 4. It trades about -0.01 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.03 per unit of volatility. If you would invest 3,103 in American Homes 4 on September 1, 2024 and sell it today you would earn a total of 517.00 from holding American Homes 4 or generate 16.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEON STORES vs. American Homes 4
Performance |
| Timeline |
| AEON STORES |
| American Homes 4 |
AEON STORES and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEON STORES and American Homes
The main advantage of trading using opposite AEON STORES and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEON STORES position performs unexpectedly, American 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 American Homes will offset losses from the drop in American Homes' long position.| AEON STORES vs. SIVERS SEMICONDUCTORS AB | AEON STORES vs. Darden Restaurants | AEON STORES vs. Reliance Steel Aluminum | AEON STORES vs. Q2M Managementberatung AG |
| American Homes vs. UDR Inc | American Homes vs. INVITATION HOMES DL | American Homes vs. Superior Plus Corp | American Homes vs. Origin Agritech |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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