Correlation Between American Homes and BANKINTER ADR

Can any of the company-specific risk be diversified away by investing in both American Homes and BANKINTER ADR 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 BANKINTER ADR 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 BANKINTER ADR 2007, you can compare the effects of market volatilities on American Homes and BANKINTER ADR 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 BANKINTER ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and BANKINTER ADR.

Diversification Opportunities for American Homes and BANKINTER ADR

0.1

Correlation Coefficient

American Homes  BANKINTER ADR

Average diversification

The 3 months correlation between American and BANKINTER is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and BANKINTER ADR 2007 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANKINTER ADR 2007 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 BANKINTER ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANKINTER ADR 2007 has no effect on the direction of American Homes i.e., American Homes and BANKINTER ADR go up and down completely randomly.

Pair Corralation between American Homes and BANKINTER ADR

Assuming the 90 days trading horizon American Homes is expected to generate 2.43 times less return on investment than BANKINTER ADR. But when comparing it to its historical volatility, American Homes 4 is 1.34 times less risky than BANKINTER ADR. It trades about 0.03 of its potential returns per unit of risk. BANKINTER ADR 2007 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  547.00  in BANKINTER ADR 2007 on September 23, 2024 and sell it today you would earn a total of  173.00  from holding BANKINTER ADR 2007 or generate 31.63% return on investment over 90 days.

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

American Homes 4  vs.  BANKINTER ADR 2007

American Homes 4

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Homes 4 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, American Homes is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BANKINTER ADR 2007

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BANKINTER ADR 2007 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BANKINTER ADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with American Homes and BANKINTER ADR

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

The idea behind American Homes 4 and BANKINTER ADR 2007 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.