Correlation Between Invitation Homes and Apple Hospitality
Can any of the company-specific risk be diversified away by investing in both Invitation Homes and Apple Hospitality 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 Apple Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invitation Homes and Apple Hospitality REIT, you can compare the effects of market volatilities on Invitation Homes and Apple Hospitality 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 Apple Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invitation Homes and Apple Hospitality.
Diversification Opportunities for Invitation Homes and Apple Hospitality
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invitation and Apple is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Invitation Homes and Apple Hospitality REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Hospitality REIT 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 Apple Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Hospitality REIT has no effect on the direction of Invitation Homes i.e., Invitation Homes and Apple Hospitality go up and down completely randomly.
Pair Corralation between Invitation Homes and Apple Hospitality
Given the investment horizon of 90 days Invitation Homes is expected to generate 5.98 times less return on investment than Apple Hospitality. But when comparing it to its historical volatility, Invitation Homes is 1.13 times less risky than Apple Hospitality. It trades about 0.04 of its potential returns per unit of risk. Apple Hospitality REIT is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,502 in Apple Hospitality REIT on August 27, 2024 and sell it today you would earn a total of 109.00 from holding Apple Hospitality REIT or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invitation Homes vs. Apple Hospitality REIT
Performance |
| Timeline |
| Invitation Homes |
| Apple Hospitality REIT |
Invitation Homes and Apple Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invitation Homes and Apple Hospitality
The main advantage of trading using opposite Invitation Homes and Apple Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invitation Homes position performs unexpectedly, Apple Hospitality 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 Apple Hospitality will offset losses from the drop in Apple Hospitality's long position.| Invitation Homes vs. American Homes 4 | Invitation Homes vs. Mid America Apartment Communities | Invitation Homes vs. Camden Property Trust | Invitation Homes vs. Sun Communities |
| Apple Hospitality vs. Park Hotels Resorts | Apple Hospitality vs. Diamondrock Hospitality | Apple Hospitality vs. Ryman Hospitality Properties | Apple Hospitality vs. Pebblebrook Hotel 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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