Correlation Between Carsales and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both Carsales and INVITATION 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 Carsales and INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and INVITATION HOMES DL, you can compare the effects of market volatilities on Carsales and INVITATION 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 Carsales with a short position of INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and INVITATION HOMES.
Diversification Opportunities for Carsales and INVITATION HOMES
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carsales and INVITATION is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES and Carsales 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 CarsalesCom are associated (or correlated) with INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of Carsales i.e., Carsales and INVITATION HOMES go up and down completely randomly.
Pair Corralation between Carsales and INVITATION HOMES
Assuming the 90 days horizon CarsalesCom is expected to generate 1.13 times more return on investment than INVITATION HOMES. However, Carsales is 1.13 times more volatile than INVITATION HOMES DL. It trades about 0.08 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about 0.02 per unit of risk. If you would invest 1,310 in CarsalesCom on October 11, 2024 and sell it today you would earn a total of 990.00 from holding CarsalesCom or generate 75.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. INVITATION HOMES DL
Performance |
| Timeline |
| CarsalesCom |
| INVITATION HOMES |
Carsales and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and INVITATION HOMES
The main advantage of trading using opposite Carsales and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, INVITATION 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| Carsales vs. MHP Hotel AG | Carsales vs. Meli Hotels International | Carsales vs. MELIA HOTELS | Carsales vs. Pebblebrook Hotel Trust |
| INVITATION HOMES vs. CHEMICAL INDUSTRIES | INVITATION HOMES vs. KINGBOARD CHEMICAL | INVITATION HOMES vs. FIH MOBILE | INVITATION HOMES vs. Sekisui Chemical 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |