Correlation Between INVITATION HOMES and ANTA SPORTS

Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES and ANTA SPORTS 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 INVITATION HOMES and ANTA SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INVITATION HOMES DL and ANTA SPORTS PRODUCT, you can compare the effects of market volatilities on INVITATION HOMES and ANTA SPORTS 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 INVITATION HOMES with a short position of ANTA SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and ANTA SPORTS.

Diversification Opportunities for INVITATION HOMES and ANTA SPORTS

-0.64

Correlation Coefficient

INVITATION HOMES  ANTA SPORTS

Excellent diversification

The 3 months correlation between INVITATION and ANTA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and ANTA SPORTS PRODUCT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA SPORTS PRODUCT and INVITATION 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 INVITATION HOMES DL are associated (or correlated) with ANTA SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANTA SPORTS PRODUCT has no effect on the direction of INVITATION HOMES i.e., INVITATION HOMES and ANTA SPORTS go up and down completely randomly.

Pair Corralation between INVITATION HOMES and ANTA SPORTS

Assuming the 90 days horizon INVITATION HOMES DL is expected to generate 1.0 times more return on investment than ANTA SPORTS. However, INVITATION HOMES is 1.0 times more volatile than ANTA SPORTS PRODUCT. It trades about 0.16 of its potential returns per unit of risk. ANTA SPORTS PRODUCT is currently generating about -0.14 per unit of risk. If you would invest  3,040  in INVITATION HOMES DL on August 30, 2024 and sell it today you would earn a total of  200.00  from holding INVITATION HOMES DL or generate 6.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

INVITATION HOMES DL  vs.  ANTA SPORTS PRODUCT

INVITATION HOMES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INVITATION HOMES DL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, INVITATION HOMES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ANTA SPORTS PRODUCT

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA SPORTS PRODUCT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ANTA SPORTS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INVITATION HOMES and ANTA SPORTS

The main advantage of trading using opposite INVITATION HOMES and ANTA SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INVITATION HOMES position performs unexpectedly, ANTA SPORTS 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 ANTA SPORTS will offset losses from the drop in ANTA SPORTS's long position.

The idea behind INVITATION HOMES DL and ANTA SPORTS PRODUCT 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.