Correlation Between American Homes and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both American Homes and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on American Homes and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and FLOW TRADERS.
Diversification Opportunities for American Homes and FLOW TRADERS
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and FLOW is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of American Homes i.e., American Homes and FLOW TRADERS go up and down completely randomly.
Pair Corralation between American Homes and FLOW TRADERS
Assuming the 90 days trading horizon American Homes is expected to generate 3.0 times less return on investment than FLOW TRADERS. But when comparing it to its historical volatility, American Homes 4 is 1.16 times less risky than FLOW TRADERS. It trades about 0.03 of its potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,846 in FLOW TRADERS LTD on October 4, 2024 and sell it today you would earn a total of 298.00 from holding FLOW TRADERS LTD or generate 16.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Homes 4 vs. FLOW TRADERS LTD
Performance |
Timeline |
American Homes 4 |
FLOW TRADERS LTD |
American Homes and FLOW TRADERS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Homes and FLOW TRADERS
The main advantage of trading using opposite American Homes and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.American Homes vs. Virtus Investment Partners | American Homes vs. Haier Smart Home | American Homes vs. HomeToGo SE | American Homes vs. LANDSEA HOMES P |
FLOW TRADERS vs. NMI Holdings | FLOW TRADERS vs. SIVERS SEMICONDUCTORS AB | FLOW TRADERS vs. Talanx AG | FLOW TRADERS vs. NorAm Drilling AS |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |