Correlation Between Apartment Investment and Charter Communications

Can any of the company-specific risk be diversified away by investing in both Apartment Investment and Charter Communications 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 Apartment Investment and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apartment Investment and and Charter Communications, you can compare the effects of market volatilities on Apartment Investment and Charter Communications 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 Apartment Investment with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apartment Investment and Charter Communications.

Diversification Opportunities for Apartment Investment and Charter Communications

-0.07

Correlation Coefficient

Apartment Investment  Charter Communications

Good diversification

The 3 months correlation between Apartment and Charter is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Investment and and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Apartment Investment 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 Apartment Investment and are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Apartment Investment i.e., Apartment Investment and Charter Communications go up and down completely randomly.

Pair Corralation between Apartment Investment and Charter Communications

Assuming the 90 days trading horizon Apartment Investment and is expected to under-perform the Charter Communications. In addition to that, Apartment Investment is 1.74 times more volatile than Charter Communications. It trades about -0.01 of its total potential returns per unit of risk. Charter Communications is currently generating about 0.01 per unit of volatility. If you would invest  3,589  in Charter Communications on December 31, 2024 and sell it today you would lose (11.00) from holding Charter Communications or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Apartment Investment and  vs.  Charter Communications

Apartment Investment and

Risk-Adjusted Performance

Weak

Over the last 90 days Apartment Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Apartment Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Charter Communications

Risk-Adjusted Performance

Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Charter Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apartment Investment and Charter Communications

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

The idea behind Apartment Investment and and Charter Communications 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 Positions Ratings module to 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.