Correlation Between Synthomer Plc and American Homes
Can any of the company-specific risk be diversified away by investing in both Synthomer Plc 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 Synthomer Plc and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthomer plc and American Homes 4, you can compare the effects of market volatilities on Synthomer Plc 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 Synthomer Plc with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthomer Plc and American Homes.
Diversification Opportunities for Synthomer Plc and American Homes
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Synthomer and American is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Synthomer plc 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 Synthomer Plc 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 Synthomer plc 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 Synthomer Plc i.e., Synthomer Plc and American Homes go up and down completely randomly.
Pair Corralation between Synthomer Plc and American Homes
Assuming the 90 days trading horizon Synthomer plc is expected to under-perform the American Homes. In addition to that, Synthomer Plc is 2.56 times more volatile than American Homes 4. It trades about -0.11 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.3 per unit of volatility. If you would invest 3,605 in American Homes 4 on September 1, 2024 and sell it today you would earn a total of 254.00 from holding American Homes 4 or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Synthomer plc vs. American Homes 4
Performance |
| Timeline |
| Synthomer plc |
| American Homes 4 |
Synthomer Plc and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synthomer Plc and American Homes
The main advantage of trading using opposite Synthomer Plc and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthomer Plc 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.| Synthomer Plc vs. Givaudan SA | Synthomer Plc vs. Antofagasta PLC | Synthomer Plc vs. Centamin PLC | Synthomer Plc vs. Atalaya Mining |
| American Homes vs. Capital Drilling | American Homes vs. Herald Investment Trust | American Homes vs. GlobalData PLC | American Homes vs. Zoom Video Communications |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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