Correlation Between UET United and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both UET United 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 UET United and INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UET United Electronic and INVITATION HOMES DL, you can compare the effects of market volatilities on UET United 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 UET United with a short position of INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and INVITATION HOMES.
Diversification Opportunities for UET United and INVITATION HOMES
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UET and INVITATION is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES and UET United 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 UET United Electronic 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 UET United i.e., UET United and INVITATION HOMES go up and down completely randomly.
Pair Corralation between UET United and INVITATION HOMES
Assuming the 90 days trading horizon UET United Electronic is expected to generate 7.1 times more return on investment than INVITATION HOMES. However, UET United is 7.1 times more volatile than INVITATION HOMES DL. It trades about 0.12 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about -0.09 per unit of risk. If you would invest 82.00 in UET United Electronic on September 16, 2024 and sell it today you would earn a total of 12.00 from holding UET United Electronic or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UET United Electronic vs. INVITATION HOMES DL
Performance |
| Timeline |
| UET United Electronic |
| INVITATION HOMES |
UET United and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UET United and INVITATION HOMES
The main advantage of trading using opposite UET United and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United 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's long position.| UET United vs. Cisco Systems | UET United vs. Nokia | UET United vs. Superior Plus Corp | UET United vs. SIVERS SEMICONDUCTORS AB |
| INVITATION HOMES vs. Computer And Technologies | INVITATION HOMES vs. Gamma Communications plc | INVITATION HOMES vs. UET United Electronic | INVITATION HOMES vs. Electronic Arts |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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