Correlation Between Douglas Elliman and American Homes
Can any of the company-specific risk be diversified away by investing in both Douglas Elliman 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 Douglas Elliman and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Elliman and American Homes 4, you can compare the effects of market volatilities on Douglas Elliman 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 Douglas Elliman with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Elliman and American Homes.
Diversification Opportunities for Douglas Elliman and American Homes
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Douglas and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Elliman 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 Douglas Elliman 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 Douglas Elliman 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 Douglas Elliman i.e., Douglas Elliman and American Homes go up and down completely randomly.
Pair Corralation between Douglas Elliman and American Homes
Given the investment horizon of 90 days Douglas Elliman is expected to generate 5.29 times more return on investment than American Homes. However, Douglas Elliman is 5.29 times more volatile than American Homes 4. It trades about 0.01 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.04 per unit of risk. If you would invest 371.00 in Douglas Elliman on August 27, 2024 and sell it today you would lose (106.00) from holding Douglas Elliman or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Douglas Elliman vs. American Homes 4
Performance |
| Timeline |
| Douglas Elliman |
| American Homes 4 |
Douglas Elliman and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Elliman and American Homes
The main advantage of trading using opposite Douglas Elliman and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Elliman 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.| Douglas Elliman vs. New England Realty | Douglas Elliman vs. Frp Holdings Ord | Douglas Elliman vs. Marcus Millichap | Douglas Elliman vs. Transcontinental Realty Investors |
| American Homes vs. American Homes 4 | American Homes vs. BRT Realty Trust | American Homes vs. Nexpoint Residential Trust | American Homes vs. Centerspace |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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