Correlation Between Gaming Realms and American Homes
Can any of the company-specific risk be diversified away by investing in both Gaming Realms 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 Gaming Realms and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming Realms plc and American Homes 4, you can compare the effects of market volatilities on Gaming Realms 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 Gaming Realms with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and American Homes.
Diversification Opportunities for Gaming Realms and American Homes
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gaming and American is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms 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 Gaming Realms 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 Gaming Realms 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 Gaming Realms i.e., Gaming Realms and American Homes go up and down completely randomly.
Pair Corralation between Gaming Realms and American Homes
Assuming the 90 days trading horizon Gaming Realms plc is expected to generate 1.77 times more return on investment than American Homes. However, Gaming Realms is 1.77 times more volatile than American Homes 4. It trades about 0.03 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.02 per unit of risk. If you would invest 2,780 in Gaming Realms plc on October 28, 2024 and sell it today you would earn a total of 880.00 from holding Gaming Realms plc or generate 31.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.78% |
| Values | Daily Returns |
Gaming Realms plc vs. American Homes 4
Performance |
| Timeline |
| Gaming Realms plc |
| American Homes 4 |
Gaming Realms and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and American Homes
The main advantage of trading using opposite Gaming Realms and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms 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.| Gaming Realms vs. Broadridge Financial Solutions | Gaming Realms vs. Jupiter Fund Management | Gaming Realms vs. Molson Coors Beverage | Gaming Realms vs. Evolution Gaming Group |
| American Homes vs. Berkshire Hathaway | American Homes vs. Samsung Electronics Co | American Homes vs. Samsung Electronics Co | American Homes vs. Chocoladefabriken Lindt Spruengli |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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