Correlation Between Supermarket Income and American Homes
Can any of the company-specific risk be diversified away by investing in both Supermarket Income 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 Supermarket Income and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supermarket Income REIT and American Homes 4, you can compare the effects of market volatilities on Supermarket Income 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 Supermarket Income with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and American Homes.
Diversification Opportunities for Supermarket Income and American Homes
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Supermarket and American is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT 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 Supermarket Income 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 Supermarket Income REIT 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 Supermarket Income i.e., Supermarket Income and American Homes go up and down completely randomly.
Pair Corralation between Supermarket Income and American Homes
Assuming the 90 days trading horizon Supermarket Income REIT is expected to generate 1.03 times more return on investment than American Homes. However, Supermarket Income is 1.03 times more volatile than American Homes 4. It trades about -0.11 of its potential returns per unit of risk. American Homes 4 is currently generating about -0.2 per unit of risk. If you would invest 7,010 in Supermarket Income REIT on October 26, 2024 and sell it today you would lose (420.00) from holding Supermarket Income REIT or give up 5.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.68% |
| Values | Daily Returns |
Supermarket Income REIT vs. American Homes 4
Performance |
| Timeline |
| Supermarket Income REIT |
| American Homes 4 |
Supermarket Income and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supermarket Income and American Homes
The main advantage of trading using opposite Supermarket Income and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income 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.| Supermarket Income vs. Beowulf Mining | Supermarket Income vs. Griffin Mining | Supermarket Income vs. Pan American Silver | Supermarket Income vs. Lundin Mining Corp |
| American Homes vs. Teradata Corp | American Homes vs. Gruppo MutuiOnline SpA | American Homes vs. Optima Health plc | American Homes vs. Vulcan Materials Co |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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