Correlation Between Fevertree Drinks and American Homes
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and American Homes 4, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and American Homes.
Diversification Opportunities for Fevertree Drinks and American Homes
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fevertree and American is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc 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 Fevertree Drinks 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 Fevertree Drinks Plc 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 Fevertree Drinks i.e., Fevertree Drinks and American Homes go up and down completely randomly.
Pair Corralation between Fevertree Drinks and American Homes
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the American Homes. In addition to that, Fevertree Drinks is 1.6 times more volatile than American Homes 4. It trades about -0.03 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.04 per unit of volatility. If you would invest 3,084 in American Homes 4 on September 3, 2024 and sell it today you would earn a total of 677.00 from holding American Homes 4 or generate 21.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.39% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. American Homes 4
Performance |
| Timeline |
| Fevertree Drinks Plc |
| American Homes 4 |
Fevertree Drinks and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and American Homes
The main advantage of trading using opposite Fevertree Drinks and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Air Products Chemicals | Fevertree Drinks vs. Sabien Technology Group | Fevertree Drinks vs. Alfa Financial Software | Fevertree Drinks vs. Albion Technology General |
| American Homes vs. AfriTin Mining | American Homes vs. Caledonia Mining | American Homes vs. SilverCrest Metals | American Homes vs. CleanTech Lithium plc |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |