Correlation Between American Homes and Amedeo Air
Can any of the company-specific risk be diversified away by investing in both American Homes and Amedeo Air 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 American Homes and Amedeo Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and Amedeo Air Four, you can compare the effects of market volatilities on American Homes and Amedeo Air 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 American Homes with a short position of Amedeo Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Amedeo Air.
Diversification Opportunities for American Homes and Amedeo Air
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Amedeo is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Amedeo Air Four in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedeo Air Four and American 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 American Homes 4 are associated (or correlated) with Amedeo Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedeo Air Four has no effect on the direction of American Homes i.e., American Homes and Amedeo Air go up and down completely randomly.
Pair Corralation between American Homes and Amedeo Air
Assuming the 90 days trading horizon American Homes is expected to generate 50.94 times less return on investment than Amedeo Air. But when comparing it to its historical volatility, American Homes 4 is 2.24 times less risky than Amedeo Air. It trades about 0.0 of its potential returns per unit of risk. Amedeo Air Four is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,374 in Amedeo Air Four on December 23, 2024 and sell it today you would earn a total of 776.00 from holding Amedeo Air Four or generate 14.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 93.65% |
Values | Daily Returns |
American Homes 4 vs. Amedeo Air Four
Performance |
Timeline |
American Homes 4 |
Amedeo Air Four |
American Homes and Amedeo Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Homes and Amedeo Air
The main advantage of trading using opposite American Homes and Amedeo Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, Amedeo Air 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 Amedeo Air will offset losses from the drop in Amedeo Air's long position.American Homes vs. Symphony Environmental Technologies | American Homes vs. United States Steel | American Homes vs. Dentsply Sirona | American Homes vs. Systemair AB |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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