Correlation Between Fortescue Metals and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals 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 Fortescue Metals and INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and INVITATION HOMES DL, you can compare the effects of market volatilities on Fortescue Metals 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 Fortescue Metals with a short position of INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and INVITATION HOMES.
Diversification Opportunities for Fortescue Metals and INVITATION HOMES
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fortescue and INVITATION is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals 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 Fortescue Metals 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 Fortescue Metals 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 Fortescue Metals i.e., Fortescue Metals and INVITATION HOMES go up and down completely randomly.
Pair Corralation between Fortescue Metals and INVITATION HOMES
Assuming the 90 days horizon Fortescue Metals Group is expected to under-perform the INVITATION HOMES. In addition to that, Fortescue Metals is 1.86 times more volatile than INVITATION HOMES DL. It trades about -0.44 of its total potential returns per unit of risk. INVITATION HOMES DL is currently generating about -0.29 per unit of volatility. If you would invest 3,130 in INVITATION HOMES DL on October 12, 2024 and sell it today you would lose (150.00) from holding INVITATION HOMES DL or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. INVITATION HOMES DL
Performance |
| Timeline |
| Fortescue Metals |
| INVITATION HOMES |
Fortescue Metals and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and INVITATION HOMES
The main advantage of trading using opposite Fortescue Metals and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals 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.| Fortescue Metals vs. Sinopec Shanghai Petrochemical | Fortescue Metals vs. Mitsui Chemicals | Fortescue Metals vs. EBRO FOODS | Fortescue Metals vs. X FAB Silicon Foundries |
| INVITATION HOMES vs. CHEMICAL INDUSTRIES | INVITATION HOMES vs. KINGBOARD CHEMICAL | INVITATION HOMES vs. FIH MOBILE | INVITATION HOMES vs. Sekisui Chemical Co |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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