Correlation Between Cable One and Invitation Homes
Can any of the company-specific risk be diversified away by investing in both Cable One and Invitation 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 Cable One and Invitation Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and Invitation Homes, you can compare the effects of market volatilities on Cable One and Invitation 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 Cable One with a short position of Invitation Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Invitation Homes.
Diversification Opportunities for Cable One and Invitation Homes
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cable and Invitation is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Invitation Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invitation Homes and Cable One 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 Cable One are associated (or correlated) with Invitation Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invitation Homes has no effect on the direction of Cable One i.e., Cable One and Invitation Homes go up and down completely randomly.
Pair Corralation between Cable One and Invitation Homes
Assuming the 90 days trading horizon Cable One is expected to generate 2.72 times more return on investment than Invitation Homes. However, Cable One is 2.72 times more volatile than Invitation Homes. It trades about 0.11 of its potential returns per unit of risk. Invitation Homes is currently generating about -0.04 per unit of risk. If you would invest 982.00 in Cable One on October 25, 2024 and sell it today you would earn a total of 102.00 from holding Cable One or generate 10.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 73.68% |
Values | Daily Returns |
Cable One vs. Invitation Homes
Performance |
Timeline |
Cable One |
Invitation Homes |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cable One and Invitation Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cable One and Invitation Homes
The main advantage of trading using opposite Cable One and Invitation Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One position performs unexpectedly, Invitation 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 Invitation Homes will offset losses from the drop in Invitation Homes' long position.Cable One vs. United Natural Foods, | Cable One vs. Fresenius Medical Care | Cable One vs. DENTSPLY SIRONA | Cable One vs. Broadcom |
Invitation Homes vs. Taiwan Semiconductor Manufacturing | Invitation Homes vs. Apple Inc | Invitation Homes vs. Alibaba Group Holding | Invitation Homes vs. Microsoft |
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 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.
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