Correlation Between Compagnie Plastic and American Homes
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic 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 Compagnie Plastic and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Plastic Omnium and American Homes 4, you can compare the effects of market volatilities on Compagnie Plastic 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 Compagnie Plastic with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and American Homes.
Diversification Opportunities for Compagnie Plastic and American Homes
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compagnie and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium 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 Compagnie Plastic 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 Compagnie Plastic Omnium 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 Compagnie Plastic i.e., Compagnie Plastic and American Homes go up and down completely randomly.
Pair Corralation between Compagnie Plastic and American Homes
Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 1.16 times more return on investment than American Homes. However, Compagnie Plastic is 1.16 times more volatile than American Homes 4. It trades about 0.19 of its potential returns per unit of risk. American Homes 4 is currently generating about -0.06 per unit of risk. If you would invest 1,000.00 in Compagnie Plastic Omnium on October 31, 2024 and sell it today you would earn a total of 88.00 from holding Compagnie Plastic Omnium or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. American Homes 4
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| American Homes 4 |
Compagnie Plastic and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and American Homes
The main advantage of trading using opposite Compagnie Plastic and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic 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.| Compagnie Plastic vs. FORWARD AIR P | Compagnie Plastic vs. JAPAN TOBACCO UNSPADR12 | Compagnie Plastic vs. Altair Engineering | Compagnie Plastic vs. Delta Air Lines |
| American Homes vs. RYANAIR HLDGS ADR | American Homes vs. NORWEGIAN AIR SHUT | American Homes vs. Scandinavian Tobacco Group | American Homes vs. JAPAN TOBACCO UNSPADR12 |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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