Correlation Between American Homes and UMS UNITED

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

Diversification Opportunities for American Homes and UMS UNITED

0.0

Correlation Coefficient

American Homes  UMS UNITED

Pay attention - limited upside

The 3 months correlation between American and UMS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and UMS UNITED MED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMS UNITED MED 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 UMS UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMS UNITED MED has no effect on the direction of American Homes i.e., American Homes and UMS UNITED go up and down completely randomly.

Pair Corralation between American Homes and UMS UNITED

If you would invest  2,698  in American Homes 4 on October 2, 2024 and sell it today you would earn a total of  762.00  from holding American Homes 4 or generate 28.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Homes 4  vs.  UMS UNITED MED

American Homes 4

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Homes 4 are ranked lower than 3 (%) 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.

UMS UNITED MED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UMS UNITED MED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, UMS UNITED is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Homes and UMS UNITED

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

The idea behind American Homes 4 and UMS UNITED MED 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.