Correlation Between INVITATION HOMES and Aurubis AG

Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES and Aurubis AG 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 Aurubis AG 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 Aurubis AG, you can compare the effects of market volatilities on INVITATION HOMES and Aurubis AG 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 Aurubis AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and Aurubis AG.

Diversification Opportunities for INVITATION HOMES and Aurubis AG

0.62

Correlation Coefficient

INVITATION HOMES  Aurubis AG

Poor diversification

The 3 months correlation between INVITATION and Aurubis is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and Aurubis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurubis AG 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 Aurubis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurubis AG has no effect on the direction of INVITATION HOMES i.e., INVITATION HOMES and Aurubis AG go up and down completely randomly.

Pair Corralation between INVITATION HOMES and Aurubis AG

Assuming the 90 days horizon INVITATION HOMES is expected to generate 3.95 times less return on investment than Aurubis AG. But when comparing it to its historical volatility, INVITATION HOMES DL is 1.61 times less risky than Aurubis AG. It trades about 0.05 of its potential returns per unit of risk. Aurubis AG is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,670  in Aurubis AG on December 29, 2024 and sell it today you would earn a total of  1,205  from holding Aurubis AG or generate 15.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

INVITATION HOMES DL  vs.  Aurubis AG

INVITATION HOMES

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INVITATION HOMES DL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Aurubis AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurubis AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aurubis AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INVITATION HOMES and Aurubis AG

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

The idea behind INVITATION HOMES DL and Aurubis AG 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.