Correlation Between United Homes and Eastern
Can any of the company-specific risk be diversified away by investing in both United Homes and Eastern 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 United Homes and Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Homes Group and Eastern Co, you can compare the effects of market volatilities on United Homes and Eastern 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 United Homes with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and Eastern.
Diversification Opportunities for United Homes and Eastern
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Eastern is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and United 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 United Homes Group are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of United Homes i.e., United Homes and Eastern go up and down completely randomly.
Pair Corralation between United Homes and Eastern
Considering the 90-day investment horizon United Homes Group is expected to generate 1.61 times more return on investment than Eastern. However, United Homes is 1.61 times more volatile than Eastern Co. It trades about 0.21 of its potential returns per unit of risk. Eastern Co is currently generating about -0.12 per unit of risk. If you would invest 539.00 in United Homes Group on September 1, 2024 and sell it today you would earn a total of 99.00 from holding United Homes Group or generate 18.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Homes Group vs. Eastern Co
Performance |
| Timeline |
| United Homes Group |
| Eastern |
United Homes and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Homes and Eastern
The main advantage of trading using opposite United Homes and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| United Homes vs. AmTrust Financial Services | United Homes vs. Artisan Partners Asset | United Homes vs. Marine Products | United Homes vs. Juniata Valley Financial |
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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