Correlation Between Intuitive Investments and American Homes
Can any of the company-specific risk be diversified away by investing in both Intuitive Investments 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 Intuitive Investments and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intuitive Investments Group and American Homes 4, you can compare the effects of market volatilities on Intuitive Investments 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 Intuitive Investments with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Investments and American Homes.
Diversification Opportunities for Intuitive Investments and American Homes
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intuitive and American is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Investments Group 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 Intuitive Investments 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 Intuitive Investments Group 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 Intuitive Investments i.e., Intuitive Investments and American Homes go up and down completely randomly.
Pair Corralation between Intuitive Investments and American Homes
Assuming the 90 days trading horizon Intuitive Investments Group is expected to generate 4.82 times more return on investment than American Homes. However, Intuitive Investments is 4.82 times more volatile than American Homes 4. It trades about 0.06 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.04 per unit of risk. If you would invest 5,500 in Intuitive Investments Group on September 2, 2024 and sell it today you would earn a total of 6,800 from holding Intuitive Investments Group or generate 123.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.51% |
| Values | Daily Returns |
Intuitive Investments Group vs. American Homes 4
Performance |
| Timeline |
| Intuitive Investments |
| American Homes 4 |
Intuitive Investments and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intuitive Investments and American Homes
The main advantage of trading using opposite Intuitive Investments and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuitive Investments 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.| Intuitive Investments vs. Toyota Motor Corp | Intuitive Investments vs. SoftBank Group Corp | Intuitive Investments vs. OTP Bank Nyrt | Intuitive Investments vs. Las Vegas Sands |
| American Homes vs. Gaztransport et Technigaz | American Homes vs. Fevertree Drinks Plc | American Homes vs. Samsung Electronics Co | American Homes vs. Molson Coors Beverage |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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