Correlation Between PROSIEBENSAT1 MEDIADR4/ and American Homes
Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and American Homes 4, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and American Homes.
Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and American Homes
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PROSIEBENSAT1 and American is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and American Homes go up and down completely randomly.
Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and American Homes
Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to under-perform the American Homes. In addition to that, PROSIEBENSAT1 MEDIADR4/ is 1.23 times more volatile than American Homes 4. It trades about -0.38 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.29 per unit of volatility. If you would invest 3,220 in American Homes 4 on September 1, 2024 and sell it today you would earn a total of 400.00 from holding American Homes 4 or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PROSIEBENSAT1 MEDIADR4 vs. American Homes 4
Performance |
| Timeline |
| PROSIEBENSAT1 MEDIADR4/ |
| American Homes 4 |
PROSIEBENSAT1 MEDIADR4/ and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROSIEBENSAT1 MEDIADR4/ and American Homes
The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ 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.| PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc |
| American Homes vs. UDR Inc | American Homes vs. Superior Plus Corp | American Homes vs. Origin Agritech | American Homes vs. Identiv |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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