Correlation Between Marie Brizard and American Homes

Can any of the company-specific risk be diversified away by investing in both Marie Brizard and American Homes 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 Marie Brizard and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marie Brizard Wine and American Homes 4, you can compare the effects of market volatilities on Marie Brizard and American Homes 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 Marie Brizard with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marie Brizard and American Homes.

Diversification Opportunities for Marie Brizard and American Homes

0.36

Correlation Coefficient

Marie Brizard  American Homes

Weak diversification

The 3 months correlation between Marie and American is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Marie Brizard Wine and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Marie Brizard 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 Marie Brizard Wine are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Marie Brizard i.e., Marie Brizard and American Homes go up and down completely randomly.

Pair Corralation between Marie Brizard and American Homes

Assuming the 90 days trading horizon Marie Brizard Wine is expected to under-perform the American Homes. But the stock apears to be less risky and, when comparing its historical volatility, Marie Brizard Wine is 1.35 times less risky than American Homes. The stock trades about -0.18 of its potential returns per unit of risk. The American Homes 4 is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,430  in American Homes 4 on December 30, 2024 and sell it today you would lose (30.00) from holding American Homes 4 or give up 0.87% of portfolio value over 90 days.

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

Marie Brizard Wine  vs.  American Homes 4

Marie Brizard Wine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marie Brizard Wine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

American Homes 4

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Homes 4 has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Marie Brizard and American Homes

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

The idea behind Marie Brizard Wine and American Homes 4 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.