Correlation Between ATRESMEDIA and American Homes
Can any of the company-specific risk be diversified away by investing in both ATRESMEDIA 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 ATRESMEDIA and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATRESMEDIA and American Homes 4, you can compare the effects of market volatilities on ATRESMEDIA 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 ATRESMEDIA with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATRESMEDIA and American Homes.
Diversification Opportunities for ATRESMEDIA and American Homes
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ATRESMEDIA and American is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ATRESMEDIA 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 ATRESMEDIA 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 ATRESMEDIA 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 ATRESMEDIA i.e., ATRESMEDIA and American Homes go up and down completely randomly.
Pair Corralation between ATRESMEDIA and American Homes
Assuming the 90 days trading horizon ATRESMEDIA is expected to under-perform the American Homes. But the stock apears to be less risky and, when comparing its historical volatility, ATRESMEDIA is 2.24 times less risky than American Homes. The stock trades about -0.08 of its potential returns per unit of risk. The American Homes 4 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,560 in American Homes 4 on August 25, 2024 and sell it today you would earn a total of 0.00 from holding American Homes 4 or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ATRESMEDIA vs. American Homes 4
Performance |
| Timeline |
| ATRESMEDIA |
| American Homes 4 |
ATRESMEDIA and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATRESMEDIA and American Homes
The main advantage of trading using opposite ATRESMEDIA and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATRESMEDIA 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.The idea behind ATRESMEDIA and American Homes 4 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| American Homes vs. INVITATION HOMES DL | American Homes vs. Superior Plus Corp | American Homes vs. NMI Holdings | American Homes vs. Origin Agritech |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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