Correlation Between Ambac Financial and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both Ambac Financial 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 Ambac Financial and INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambac Financial Group and INVITATION HOMES DL, you can compare the effects of market volatilities on Ambac Financial 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 Ambac Financial with a short position of INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambac Financial and INVITATION HOMES.
Diversification Opportunities for Ambac Financial and INVITATION HOMES
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ambac and INVITATION is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ambac Financial Group and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES and Ambac Financial 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 Ambac Financial Group 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 Ambac Financial i.e., Ambac Financial and INVITATION HOMES go up and down completely randomly.
Pair Corralation between Ambac Financial and INVITATION HOMES
Assuming the 90 days trading horizon Ambac Financial Group is expected to generate 2.1 times more return on investment than INVITATION HOMES. However, Ambac Financial is 2.1 times more volatile than INVITATION HOMES DL. It trades about 0.05 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about -0.23 per unit of risk. If you would invest 1,140 in Ambac Financial Group on September 22, 2024 and sell it today you would earn a total of 20.00 from holding Ambac Financial Group or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambac Financial Group vs. INVITATION HOMES DL
Performance |
| Timeline |
| Ambac Financial Group |
| INVITATION HOMES |
Ambac Financial and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambac Financial and INVITATION HOMES
The main advantage of trading using opposite Ambac Financial and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambac Financial 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.| Ambac Financial vs. WisdomTree Investments | Ambac Financial vs. SLR Investment Corp | Ambac Financial vs. EAT WELL INVESTMENT | Ambac Financial vs. New Residential Investment |
| INVITATION HOMES vs. Equity Residential | INVITATION HOMES vs. AvalonBay Communities | INVITATION HOMES vs. UDR Inc | INVITATION HOMES vs. Mid America Apartment 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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