Correlation Between FUYO GENERAL and American Homes
Can any of the company-specific risk be diversified away by investing in both FUYO GENERAL 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 FUYO GENERAL and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUYO GENERAL LEASE and American Homes 4, you can compare the effects of market volatilities on FUYO GENERAL 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 FUYO GENERAL with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUYO GENERAL and American Homes.
Diversification Opportunities for FUYO GENERAL and American Homes
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FUYO and American is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE 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 FUYO GENERAL 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 FUYO GENERAL LEASE 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 FUYO GENERAL i.e., FUYO GENERAL and American Homes go up and down completely randomly.
Pair Corralation between FUYO GENERAL and American Homes
Assuming the 90 days horizon FUYO GENERAL is expected to generate 1.87 times less return on investment than American Homes. But when comparing it to its historical volatility, FUYO GENERAL LEASE is 1.5 times less risky than American Homes. It trades about 0.05 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,316 in American Homes 4 on September 30, 2024 and sell it today you would earn a total of 224.00 from holding American Homes 4 or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FUYO GENERAL LEASE vs. American Homes 4
Performance |
| Timeline |
| FUYO GENERAL LEASE |
| American Homes 4 |
FUYO GENERAL and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FUYO GENERAL and American Homes
The main advantage of trading using opposite FUYO GENERAL and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUYO GENERAL 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.| FUYO GENERAL vs. Ashtead Group plc | FUYO GENERAL vs. WillScot Mobile Mini | FUYO GENERAL vs. Avis Budget Group | FUYO GENERAL vs. Sixt SE |
| American Homes vs. AvalonBay Communities | American Homes vs. INVITATION HOMES DL | American Homes vs. Sun Communities | American Homes vs. Essex Property Trust |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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