Correlation Between Invitation Homes and Cable One
Can any of the company-specific risk be diversified away by investing in both Invitation Homes and Cable One 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 Invitation Homes and Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invitation Homes and Cable One, you can compare the effects of market volatilities on Invitation Homes and Cable One 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 Invitation Homes with a short position of Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invitation Homes and Cable One.
Diversification Opportunities for Invitation Homes and Cable One
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Invitation and Cable is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Invitation Homes and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and Invitation Homes 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 Invitation Homes are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Invitation Homes i.e., Invitation Homes and Cable One go up and down completely randomly.
Pair Corralation between Invitation Homes and Cable One
Assuming the 90 days trading horizon Invitation Homes is expected to generate 0.54 times more return on investment than Cable One. However, Invitation Homes is 1.85 times less risky than Cable One. It trades about 0.02 of its potential returns per unit of risk. Cable One is currently generating about -0.34 per unit of risk. If you would invest 3,885 in Invitation Homes on October 16, 2024 and sell it today you would earn a total of 4.00 from holding Invitation Homes or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 52.94% |
| Values | Daily Returns |
Invitation Homes vs. Cable One
Performance |
| Timeline |
| Invitation Homes |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cable One |
Invitation Homes and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invitation Homes and Cable One
The main advantage of trading using opposite Invitation Homes and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invitation Homes position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One's long position.| Invitation Homes vs. Air Products and | Invitation Homes vs. Unifique Telecomunicaes SA | Invitation Homes vs. TAL Education Group | Invitation Homes vs. Alaska Air Group, |
| Cable One vs. Fresenius Medical Care | Cable One vs. Medical Properties Trust, | Cable One vs. Monster Beverage | Cable One vs. United Natural Foods, |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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