Correlation Between Camden Property and Invitation Homes
Can any of the company-specific risk be diversified away by investing in both Camden Property 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 Camden Property and Invitation Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Camden Property Trust and Invitation Homes, you can compare the effects of market volatilities on Camden Property 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 Camden Property with a short position of Invitation Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Camden Property and Invitation Homes.
Diversification Opportunities for Camden Property and Invitation Homes
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Camden and Invitation is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Camden Property Trust and Invitation Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invitation Homes and Camden Property 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 Camden Property 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 Camden Property i.e., Camden Property and Invitation Homes go up and down completely randomly.
Pair Corralation between Camden Property and Invitation Homes
Considering the 90-day investment horizon Camden Property Trust is expected to generate 0.81 times more return on investment than Invitation Homes. However, Camden Property Trust is 1.24 times less risky than Invitation Homes. It trades about 0.15 of its potential returns per unit of risk. Invitation Homes is currently generating about 0.01 per unit of risk. If you would invest 9,972 in Camden Property Trust on August 24, 2024 and sell it today you would earn a total of 2,227 from holding Camden Property Trust or generate 22.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Camden Property Trust vs. Invitation Homes
Performance |
| Timeline |
| Camden Property Trust |
| Invitation Homes |
Camden Property and Invitation Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Camden Property and Invitation Homes
The main advantage of trading using opposite Camden Property and Invitation Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Camden Property 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.| Camden Property vs. Nexpoint Residential Trust | Camden Property vs. Centerspace | Camden Property vs. Equity Lifestyle Properties | Camden Property vs. Elme Communities |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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