Correlation Between One Media and American Homes
Can any of the company-specific risk be diversified away by investing in both One Media 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 One Media and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One Media iP and American Homes 4, you can compare the effects of market volatilities on One Media 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 One Media with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Media and American Homes.
Diversification Opportunities for One Media and American Homes
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between One and American is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding One Media iP 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 One Media 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 One Media iP 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 One Media i.e., One Media and American Homes go up and down completely randomly.
Pair Corralation between One Media and American Homes
Assuming the 90 days trading horizon One Media iP is expected to generate 4.22 times more return on investment than American Homes. However, One Media is 4.22 times more volatile than American Homes 4. It trades about 0.08 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.07 per unit of risk. If you would invest 400.00 in One Media iP on September 12, 2024 and sell it today you would earn a total of 20.00 from holding One Media iP or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
One Media iP vs. American Homes 4
Performance |
| Timeline |
| One Media iP |
| American Homes 4 |
One Media and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with One Media and American Homes
The main advantage of trading using opposite One Media and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Media 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.| One Media vs. Catalyst Media Group | One Media vs. CATLIN GROUP | One Media vs. Tamburi Investment Partners | One Media vs. Magnora ASA |
| American Homes vs. Auto Trader Group | American Homes vs. Metals Exploration Plc | American Homes vs. Infrastrutture Wireless Italiane | American Homes vs. Bisichi Mining PLC |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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